A, B, C ates, and time periods Using a present value table, your calcuputer program present value function, verify that the present value oreceived in five years at an interest rate of 16%, compounded annuCalculate the present value of $100,000 for each of the followingusing these facts, except

Answered: ates, and time periods Using a present…

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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Question

A, B, C

ates, and time periods Using a present value table, your calcu
puter program present value function, verify that the present value o
received in five years at an interest rate of 16%, compounded annu
Calculate the present value of $100,000 for each of the following
using these facts, except

Expert Solution

Step 1

Note: Since you have posted a question with multiple subparts, we will solve the first three subparts for you. To get the remaining subparts solved, please repost the complete question and mention the subparts to be solved.

Present value is given by following formula :

PV = $\frac{C F}{{(1 + r)}^{t}}$

where PV stands for present value

CF cash flow

r interest rate

t time period

Step 2

PV = $\frac{$ 100, 000}{{(1 + r)}^{t}}$

= $\frac{$ 100, 000}{{(1 + 0.16)}^{5}}$

= $\frac{$ 100, 000}{{(1.16)}^{5}}$

= $\frac{$ 100, 000}{2.1004}$

= $ 47,610

Hence verified that the present value of $100,000, to be received in five years, compounding annually at the rate of 16% is $47,610.

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