Managerial Accounting: Tools for Business Decision Making
Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
Question
Book Icon
Chapter A, Problem A.9BE
To determine

Present value: This is the amount of future value reducedor discounted at a rate of interest till particular current date.

Formula to compute present value:

Present value of an amount = Future value(1 + interest rate)numberofperiods

Or,

Presentvalue} = {Future value × Present value factor of $1 at interest rate for time periods}

To determine: The amount that Company M should pay for the investment to earn an 8% return.

Blurred answer
Students have asked these similar questions
A company is considering an investment expected to yield $70,000 after six years. If this company demands an 8% return, how much is it willing to pay for this investment today?
Oriole Company is considering an investment that will return a lump sum of $879,000 3 years from now. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What amount should Oriole Company pay for this investment to earn an 9% return? (Round answer to 2 decimal places, e.g. 25.25.) Lincoln Company should pay $
Cullumber Company is considering an investment that will return a lump sum of $830,000 6 years from now. Click here to view the factor table. What amount should Cullumber Company pay for this investment to earn an 12% return? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 25.25.) Cullumber Company should pay eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College