Present Value of an AnnuityDetermine the present value of $170,000 to be received at the end of each of four years, using an interest rate of 5.5%, 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 yearSecond YearThird YearFourth YearTotal present valueb. 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 $170,000 cash receipts less than the $680,000 to be received in the future?The present value is less due toover the 4 years.Exhibit 5 Present Value of $1 at Compound InterestPeriods4%4%%5%5%%6%62%7%10%11%12%13%0.961540.9569400.952380.947870.943400.938970.934580.909090.900900.892860.8849620.924560.9157300.907030.898450.890000.881660.873440.826450.811620.797190.7831530.889000.8763000.863840.851610.839620.827850.816300.751310.731190.711780.6930540.854800.8385600.822700.807220.792090.777320.762900.683010.658730.635520.613320.821930.8024500.783530.765130.747260.729880.712990.620920.593450.567430.542760.790310.7679000.746220.725250.704960.685330.666340.564470.534640.506630.4803270.759920.7348300.710680.687440.665060.643510.622750.513160.481660.452350.4250680.730690.7031900.676840.651600.627410.604230.582010.466510.433930.403880.3761690.702590.6729000.644610.617630.591900.567350.543930.424100.390920.360610.33288100.675560.6439300.613910.585430.558390.532730.508350.385540.352180.321970.29459Exhibit 7 Present Value of an Annuity of $1 at Compound InterestPeriods4%4%%5%5%%6%64%7%10%11%12%13%0.961540.956940.952380.947870.943400.938970.934580.909090.900900.892860.8849621.886091.872671.859411.846321.833391.820631.808021.735541.712521.690051.6681032.775092.748962.723252.697932.673012.648482.624322486852443712.401832.3611543.629903.587533.545953.505153.465113.425803.387213.169873.102453.037352.974474.451824.389984.329484.270284.212364.155684.100203.790793.695903.604783.517235.242145.157875.075694.995534.917324.841014.766544.355264.230544.111413.9975576.002055.892705.786375.682975.582385.484525.389294.868424.712204.563764.422618.6.732746.595896.463216.334576.209796.088755.971305.334935.146124.967644.796777.435337.268797.107826.952206.801696.656106.515235.759025.537055.328255.13166108.110907.912727.721737.537637.360097.188837.023586.144575.889235.650225.42624

Solution a: Amount PV Factor Present Value First Year $170,000.00 0.94787 $161,138 Second…

Determine the present value of $170,000 to be received at the end of each of four years, using an interest rate of 5.5%, compounded annually, as 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 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 $170,000 cash receipts less than the $680,000 to be received in the future?

Determine the present value of $170,000 to be received at the end of each of four years, using an interest rate of 5.5%, compounded annually, as 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 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 $170,000 cash receipts less than the $680,000 to be received in the future?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

If $1000 is deposited at the end of each year for 5 years into an ordinary annuity earning 8.99% compounded annually, construct a balance sheet showing the interest earned during each year and the balance at the end of each year. Complete the balance sheet. Period Amount Interest Balance 1 $1000.00 2 $1000.00 3 $1000.00 4 $1000.00 $ $4 $1000.00 $4 $ (Round to the nearest cent as needed.)
Find the value of the annuity at the end of the indicated number of years. Assume that the interest is compounded with the same frequency as the deposits. (Round your answer to the nearest cent.)$ Amount of Deposit m Frequency n Rate r Time t $250 semiannually 4% 30 yr
.
Present Value of an Annuity Determine the present value of $310,000 to be received at the end of each of four years, using an interest rate of 6%, 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 $fill in the blank 1 Second Year fill in the blank 2 Third Year fill in the blank 3 Fourth Year fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.$fill in the blank 6 c. Why is the present value of the four $310,000 cash receipts less than the $1,240,000 to be received in the future?The present value is less due to..........................over the 4 years.
What annual deposit is necessary to have $15,000 in 7 years if all the money is deposited at 1.5% interest compounded annually? (a) State the type. amortization sinking fund ordinary annuity present value of an annuity present 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 $6,500 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Deposit Date The payments are received at the end of each of the five years and interest is compour Note: Round your final answers to nearest whole dollar amount. First payment Second payment Third payment Fourth payment Fifth payment j= 3% 3% 3% 3% 3% Required 3 X Answer is complete but not entirely corre n= 4 ✓ $ 8 12 16 ✓…
Thanks
Find the value of the annuity at the end of the indicated number of years. Assume that the interest is compounded with the same frequency as the deposits. (Round your answer to the nearest cent.)$ Amount of Deposit m Frequency n Rate r Time t $900 annually 1% 20 yr