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
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Chapter1: Financial Statements And Business Decisions
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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 8.24
Method A assumes simple interest over final fractional periods, while Method
B assumes simple discount over final fractional periods. The annual effective
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.
Transcribed Image Text:Problem 8.24 Method A assumes simple interest over final fractional periods, while Method B assumes simple discount over final fractional periods. The annual effective 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.
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