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

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