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The following payments are to be received and Using an annual effective interest rate of 2% (a) with payments P50,000 at the end of the first year, P 52,500 at the end of the second P 55,000 at the end of the third year and so on, until the final payment is P75,000. Determine the present value of these payments at time 0 and accumulated value at the time of the last payment using Increasing Annuity formulas instead. You may verify results only using the general formula. year,

The following payments are to be received and Using an annual effective interest rate of 2% (a) with payments P50,000 at the end of the first year, P 52,500 at the end of the second P 55,000 at the end of the third year and so on, until the final payment is P75,000. Determine the present value of these payments at time 0 and accumulated value at the time of the last payment using Increasing Annuity formulas instead. You may verify results only using the general formula. year,

FINANCIAL ACCOUNTING
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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The following payments are to be received and Using an annual effective interest rate of 2% (a) with payments P50,000 at the end of the first year, P52,500 at the end of the second year, P 55,000 at the end of the third year and so on, until the final payment is P75,000. Determine the present value of these payments at time 0 and accumulated value at the time of the last payment using Increasing Annuity formulas instead. You may verify results only using the general formula. (b) Do the same as in (b) whenever the payments are P 50,000 at the end of the first year, P47,500 at the end of the second year, P 45,000 at the end of the third year and so on, until the final payment is P 2,500. 3 (c) What if the payments in (a) increase by 1% for 10 years? 5 (d) What if the payments in (a) and (c) are perpetual payments, how much is the initial worth of each?
Transcribed Image Text:The following payments are to be received and Using an annual effective interest rate of 2% (a) with payments P50,000 at the end of the first year, P52,500 at the end of the second year, P 55,000 at the end of the third year and so on, until the final payment is P75,000. Determine the present value of these payments at time 0 and accumulated value at the time of the last payment using Increasing Annuity formulas instead. You may verify results only using the general formula. (b) Do the same as in (b) whenever the payments are P 50,000 at the end of the first year, P47,500 at the end of the second year, P 45,000 at the end of the third year and so on, until the final payment is P 2,500. 3 (c) What if the payments in (a) increase by 1% for 10 years? 5 (d) What if the payments in (a) and (c) are perpetual payments, how much is the initial worth of each?
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