Determine the present value of $210,000 to be received at the end of each of four years, using an interest rate of 79%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value table in Exhibit 10. Round to the nearest whole dollar. c. Why is the present value of the four $210,000 cash receipts less than the $340,000 to be received in the future? The present value is less due to over the 4 years.
Determine the present value of $210,000 to be received at the end of each of four years, using an interest rate of 79%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value table in Exhibit 10. Round to the nearest whole dollar. c. Why is the present value of the four $210,000 cash receipts less than the $340,000 to be received in the future? The present value is less due to over the 4 years.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Present Value of an Annuity
Determine the present value of $210,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows:
a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar.
First year
Second Year
Third Year
Fourth Year
Total present value
b. By using the present value table in Exhibit 10. Round to the nearest whole dollar.
c. Why is the present value of the four $210,000 cash receipts less than the $840,000 to be received in the future?
The present value is less due to
over the 4 years.
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