Compute the book value of an asset with FC of ₱4 500 000 after 7th year if it has useful life of 13 years and annual depreciation rate of 7%. Use declining balance method. Prepare the depreciation table and show Complete solution

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Q: Compute the book value of an asset with FC of ₱4 500 000 after 7th year if it has useful life of 13…

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.