## Chapter 11 Homework### Present Value of Amounts DueAssume that you are going to receive $450,000 in 10 years. The current market rate of interest is 5%.### Task**a.** Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. **Round to the nearest whole dollar.**_Answer:_ $ [Input Box] [Incorrect Mark: "X"]**b.** Why is the present value less than the $450,000 to be received in the future?_Answer:_ The present value is less due to the **compounding of interest** [Correct Mark: "✔"] over the 10 years.This exercise highlights the concept of the present value of future amounts, which reflects the principle that money available now is worth more than the same amount in the future due to its potential earning capacity. This is a fundamental concept in financial planning, investment strategies, and economic theory.

PRESENT VALUEPresent Value is the Current Value of Future Cash Flows at a Discounting Rate.Present…

Answered: Chapter 11 Homework Present value of…

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 9 Suppose you need to accumulate GHȼ100,000 in 10 years. You plan to make a deposit in a bank now, at Time 0, and then make 9 more deposits at the beginning of each of the following 9 years, for a total of 10 deposits. The bank pays 6% interest, you expect inflation to be 2% per year, and you plan to increase your annual deposits at the inflation rate. How much must you deposit initially?
Question 15 The 18,000-dollar present value of a certain annuity carries a payment amount that needs to be made indefinitely at 7.12% interest rate, compounded weekly. How much money should be paid regularly? A $23.18 B $24.65 C) $22.56 D) $20.93
question 5 out 20
Chapter 7 Self Test Problem #2
8
Problem VI: Annual effective interest rate is 10%. You are thinking about the present value of two different perpetuities. The first has payments which start at $100 per year and increase by 10% cach year.forever. The second has payments which start at $1000 and increase by $1000 each year forever. Discuss the challenges and approaches you would use to try to find the present values. Bonus: For extra credit, find the present values. Your answer
QUESTION 15 What is the effective semi-annual interest rate considering an APR of 8% compounded continuously? 5.127% 4.081% 3.872% 4.603% QUESTION 16 In case you deposit $5,000 every year for 20 years in a savings account that earns 9% compounded yearly. What is the future value of this series at year 20? Suppose the payments are made at the begining of the period. O$255,800.60 $278,822.65 $505,365.21 $472,303.93
QUESTION 14 What’s the interest rate of a 8-year, annual $3,500 annuity with present value of $20,000? (Use a time value of money calculator or a spreadsheet. Round your answer to 2 decimal places.) ANNUITY INTEREST RATE %
QUESTION 14 Suppose you have a credit card balance of $15,000 and you want to pay it off in two years. What will the monthly loan payment be if the APR on the credit card is 24%?
Question 22 If the annual interest rate is 5%, what is the rate for each quarter? Your answer: O 5% O 1.5% O 1.25% Clear answer Back Next
12:41 Expert Q&A Done Esamedt ha et er y horned a The Tu Compare the interest eamed by $10,000 for seven years at 8% simple interest with interest earned by the same amount for seven years at 8% compounded aniually. Why does a difference occur? Click the icon to view the interest and annuity table for discrete compounding when i= 8% per year The simple interest eamed is S (Round to the nearest dollar) The compound interest eamed is $ (Round to the nearest dollar) There is a difference in the amount of interest eamed because allows interest from previous years to earn additional interest, whereas ▼ only considers the original principal. Enter your answer in cach of the answer boxes
Question 6.10 To accumulate 36,419.74 at the end of 3n years, deposits of 174 are made at the end of the first n years, and deposits of 87 are made at the end of each of the next 2n years. The annual effective interest rate is i, and you are given that: (1+1)" = 3 Calculate /. A 7.64% B 10.51% C 10.75% D 14.81% E 15.05%

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