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Following is a table for the present value of $1 at compound interest: Year 6% 10% 1 0.943 0.909 2 0.890 0.826 3 0.840 0.751 4 0.792 0.683 5 0.747 0.621 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 1 0.943 0.909 2 1.833 1.736 3 2.673 2.487 4. 3.465 3.170 5 4.212 3.791 12% 0.893 0.797 0.712 0.636 0.567 12% 0.893 1.690 2.402 3.037 3.605 Using the tables provided, the present value of $17,747 (rounded to the nearest dollar) to be received 4 years from today, assuming an earnings rate of 10%, is Oa. $12,121 Ob. $14,056 Oc. $56,258 Od. $17,747

Following is a table for the present value of $1 at compound interest: Year 6% 10% 1 0.943 0.909 2 0.890 0.826 3 0.840 0.751 4 0.792 0.683 5 0.747 0.621 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 1 0.943 0.909 2 1.833 1.736 3 2.673 2.487 4. 3.465 3.170 5 4.212 3.791 12% 0.893 0.797 0.712 0.636 0.567 12% 0.893 1.690 2.402 3.037 3.605 Using the tables provided, the present value of $17,747 (rounded to the nearest dollar) to be received 4 years from today, assuming an earnings rate of 10%, is Oa. $12,121 Ob. $14,056 Oc. $56,258 Od. $17,747

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The image contains two tables and a multiple-choice question regarding the present value of money at compound interest rates. --- **Table 1: Present Value of $1 at Compound Interest** This table shows how the present value of $1 changes over time with different interest rates: | Year | 6% | 10% | 12% | |------|------|------|------| | 1 | 0.943| 0.909| 0.893| | 2 | 0.890| 0.826| 0.797| | 3 | 0.840| 0.751| 0.712| | 4 | 0.792| 0.683| 0.636| | 5 | 0.747| 0.621| 0.567| --- **Table 2: Present Value of an Annuity of $1 at Compound Interest** This table shows the present value of an annuity of $1 over time with different interest rates: | Year | 6% | 10% | 12% | |------|------|------|------| | 1 | 0.943| 0.909| 0.893| | 2 | 1.833| 1.736| 1.690| | 3 | 2.673| 2.487| 2.402| | 4 | 3.465| 3.170| 3.037| | 5 | 4.212| 3.791| 3.605| --- **Question:** Using the tables provided, the present value of $17,747 (rounded to the nearest dollar) to be received 4 years from today, assuming an earnings rate of 10%, is: - A. $12,121 - B. $14,056 - C. $56,258 - D. $17,747 **Note:** The reader is to use the 10% rate for year 4 from the first table to calculate the present value.
Transcribed Image Text:The image contains two tables and a multiple-choice question regarding the present value of money at compound interest rates. --- **Table 1: Present Value of $1 at Compound Interest** This table shows how the present value of $1 changes over time with different interest rates: | Year | 6% | 10% | 12% | |------|------|------|------| | 1 | 0.943| 0.909| 0.893| | 2 | 0.890| 0.826| 0.797| | 3 | 0.840| 0.751| 0.712| | 4 | 0.792| 0.683| 0.636| | 5 | 0.747| 0.621| 0.567| --- **Table 2: Present Value of an Annuity of $1 at Compound Interest** This table shows the present value of an annuity of $1 over time with different interest rates: | Year | 6% | 10% | 12% | |------|------|------|------| | 1 | 0.943| 0.909| 0.893| | 2 | 1.833| 1.736| 1.690| | 3 | 2.673| 2.487| 2.402| | 4 | 3.465| 3.170| 3.037| | 5 | 4.212| 3.791| 3.605| --- **Question:** Using the tables provided, the present value of $17,747 (rounded to the nearest dollar) to be received 4 years from today, assuming an earnings rate of 10%, is: - A. $12,121 - B. $14,056 - C. $56,258 - D. $17,747 **Note:** The reader is to use the 10% rate for year 4 from the first table to calculate the present value.
Expert Solution
Step 1

The present value of a single future value amount is calculated by the following formula:

 

If the present value factor is available,

Present value = Future value * Present value factor

If the present value factor is not available,

Present value = F ÷ (1+r)n

Where,

F = Future value

r = Rate of interest per period

n = Total number of period

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