Method A assumes simple interest over nal fractional periods, while Method B assumes simple discount over nal fractional periods. The annual eective rate of interest is 20%. Find the ratio of the present value of a payment to be made in 1.5 years computed under method A to that computed under Method B Problem 8.24Method A assumes simple interest over final fractional periods, while MethodB assumes simple discount over final fractional periods. The annual effectiverate of interest is 20%. Find the ratio of the present value of a payment tobe made in 1.5 years computed under method A to that computed underMethod B.

Simple Interest vs. Simple Discount In case of Simple Interest, the Interest is calculated on…

Method A assumes simple interest over nal fractional periods, while Method B assumes simple discount over nal fractional periods. The annual eective rate of interest is 20%. Find the ratio of the present value of a payment to be made in 1.5 years computed under method A to that computed under Method B

Method A assumes simple interest over nal fractional periods, while Method B assumes simple discount over nal fractional periods. The annual eective rate of interest is 20%. Find the ratio of the present value of a payment to be made in 1.5 years computed under method A to that computed under Method B

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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