Exercise 14A-4 (Algo) Basic Present Value Concepts [LO14-7]Fraser Company will need a new warehouse in eighteen years. The warehouse will cost $410,000 to build. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.Required:What lump-sum amount should the company invest now to have the $410,000 available at the end of the eighteen-year period? Assume that the company can invest money at: (Round your final answer to the nearest whole dollar amount.) Exercise 14A-4 (Algo) Basic Present Value Concepts [LO14-7]Fraser Company will need a new warehouse in eighteen years. The warehouse will cost $410,000 to build.Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.Required:What lump-sum amount should the company invest now to have the $410,000 available at the end of the eighteen-year period?Assume that the company can invest money at: (Round your final answer to the nearest whole dollar amount.)Present Value1. Seven percent2. Twelve percent

Time value of money states that the value of money decreases over time. The present value of a future cash flow amount is less than the future $ value. Present value is calculated using a discounting factor rate.>Interest rate to be considered = 7% and 12$ >Period to be considered = 18 Present Value Table used 1 7% $121,319 PV of $1: Table B1 [$410000 x 0.2959] 2 12% $53,300 PV of $1: Table B1 [$410000 x 0.1300]

Answered: Exercise 14A-4 (Algo) Basic 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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Exercise 14A-4 (Algo) Basic Present Value Concepts [LO14-7]

Fraser Company will need a new warehouse in eighteen years. The warehouse will cost $410,000 to build.

Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.

Required:

What lump-sum amount should the company invest now to have the $410,000 available at the end of the eighteen-year period? Assume that the company can invest money at: (Round your final answer to the nearest whole dollar amount.)

Exercise 14A-4 (Algo) Basic Present Value Concepts [LO14-7]
Fraser Company will need a new warehouse in eighteen years. The warehouse will cost $410,000 to build.
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.
Required:
What lump-sum amount should the company invest now to have the $410,000 available at the end of the eighteen-year period?
Assume that the company can invest money at: (Round your final answer to the nearest whole dollar amount.)
Present Value
1. Seven percent
2. Twelve percent

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