Answered: Q4. One thousand dollars is due at the…

Q4. One thousand dollars is due at the end of 2 years and $1,500 at the end of 4 years. If the money is worth j, = 8%, calculate an equivalent single amount at the end of 3 years,

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8EA: You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how...

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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Q4. One thousand dollars is due at the end of 2 years and $1,500 at the end of 4 years. If the
money is worth j, = 8%, calculate an equivalent single amount at the end of 3 years,

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