Determine the present value of $110,000 to be received at the end of each of 4 years, using an interest rate of 10%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year 1,000,00 X Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. c. Why is the present value of the four $110,000 cash receipts less than the $440,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years.

Determine the present value of $110,000 to be received at the end of each of 4 years, using an interest rate of 10%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year 1,000,00 X Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. c. Why is the present value of the four $110,000 cash receipts less than the $440,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 7P

See similar textbooks

Related questions

Q: need part d, e, f answered

A: Income tax expense for the year is calculated by adjusting deferred tax liability and deferred tax…

Q: Describe the functions and powers of ASIC

A: Australian securities and investment commission is a commission made in 1998 of Australian…

Q: What would be the equasion for solving this

A: Formula for calculating yearly payment: Yearly payment=(Loan amount * Rate%)1-1(1+Rate%)n

Q: Explain how to get the answer to this problem.

A: Equivalent units: When in the product is going to the more than one process then the lots of units…

Q: Explain the benefits of JIT.

A: Just-in-time manufacturing system: Just-in-time (JIT) manufacturing system is an approach to…

Q: Describe about the NOL.

A: NOL means Net Operating Loss. This is a situation when company's deductions are more than it's…

Q: how to learn CAPM model?

A: In order to increase the return and reduce the risk, investors generally adding some securities to…

Q: please explain the answer B

A: In the net realizable value method, joint costs are allocated based on the total final sales value…

Q: Trying to find answer a through e

A: Since the question has more than 3 sub-parts, the first 3 subparts are answered. If you want the…

Q: Define conversion value

A: Convertibles are a category of financial instruments, such as convertible bonds and preferred…

Q: Explain the Relationship to the PW Analysis?

A: The question is based on the concept of present worth analysis of a project or cash flows.

Q: RTN: What is its significance?

A: RTN is an abbreviation of Routing Transit Number, which is very important aspect in the banking as…

Question

need complete answer with working

Determine the present value of $110,000 to be received at the end of each of 4 years, using an interest rate of 10%, compounded annually, as follows:
a. By successive computations, using the present value of $1 table in Exhibit S. Round to the nearest whole dollar.
First year
1,000,00 X
Second Year
Third Year
Fourth Year
Total present value
b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.
c. Why is the present value of the four $110,000 cash receipts less than the $440,000 to be received in the future?
The present value is less due to the compounding of interest
over the 4 years.
Feedback
Check My Work
Review the time value of money concept. Recall that the time value of money concept recognizes that cash received today is worth more than the same amount
of cash to be received in the future.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Calculation(a)

VIEW

Step 3: Explanation (b)

VIEW

Step 4: Explanation (c)

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Determine the present value of $250,000 to be received at the end of each of 4 years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year 44,325 X Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. c. Why is the present value of the four $250,000 cash receipts less than the $1,000,000 to be received in the future? The present value is less due to i over the 4 years.
.
Find the future value of an ordinary annuity of $700 paid at the end of each year for 4 years, if interest is earned at a rate of 6%, compounded annual. The future value is $ (Round to 2 decimal places.)
Find the future value of an ordinary annuity of $900 paid at the end of each year for 2 years, if interest is earned at a rate of 4%, compounded annual.The future value is $ (Round to 2 decimal places.)
Compute the present value of an annuity of $621 per year for 25 years, given a discount rate of 6 percent per annum. Assume that the first cash flow will occur one year from today (that is, at t = 1). Round your answer to 2 decimal places; record your answer without commas and without a dollar sign. Your Answer: Answer
Present value of an annuity Determine the present value of $160,000 to be received at the end of each of 4 years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value
Find the present value of an annuity with annual payments of $1,100.00 compounded at the end of each year for 8 years after being deferred for 3 years, if money is worth 6.3%, compounded annual. The present value would be $ . (Round to 2 decimal places.)
Classify the financial problem. Assume a 9% interest rate compounded annually. Deposit $200 at the end of each year. What is the total in the account in 10 years? A. sinking fundB.present value C.amortizationD. ordinary annuityE. future value Answer the question. (Round your answer to the nearest cent.)
What is the future value of $118,000 invested for 5 years at 11% compounded monthly? (a) State the type. A. ordinary annuityB. present value C. amortizationD. sinking fundE. future value (b) Answer the question. (Round your answer to the nearest cent.)
Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $6,200 under each of the following situations: Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) 1. The payments are received at the end of each of the five years and interest is compounded annually. 2. The payments are received at the beginning of each of the five years and interest is compounded annually. 3. The payments are received at the end of each of the five years and interest is compounded quarterly.
Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $4,100 under each of the following situations: Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) 1. The payments are received at the end of each of the five years and interest is compounded annually. 2. The payments are received at the beginning of each of the five years and interest is compounded annually. 3. The payments are received at the end of each of the five years and interest is compounded quarterly. Complete this question by entering your answers in the tabs below. Required 1 Required 2 The payments are received at the end of each of the five years and interest is compounded quarterly. Note: Round your final answers to nearest whole dollar amount. Deposit Deposit Date First payment Second payment Third payment Fourth payment Fifth payment is Required 3 DH 3% 4 3% 8 3% 12 3% 16 3% 20 S 4,100 4,100 4,100…