The present value of $66,000 to be received in two years, at 12% compounded annually, isneeded.Present Value of $1 at Compound InterestPeriods5%6%7%10%12%10.952380.943400.934580.909090.8928620.907030.890000.873440.826450.7971930.863840.839620.816300.751320.7117840.822700.792090.762900.683010.6355250.783530.747260.71299 0.620920.5674360.746220.704960.666340.564470.5066370.710680.665060.622750.513160.4523580.676840.627410.582010.46651 0.4038890.644610.591900.543930.424100.36061100.558400.385540.613910.508350.32197Oa. $54,546Ob. $58,740Oc. $52,615Od. $57,647A(rounded to nearest dollar). Use the following table, if

We will use the concept of time value of money here. As per the concept of time value of money the…

The present value of $66,000 to be received in two years, at 12% compounded annually, is needed. Present Value of $1 at Compound Interest Periods 5% 6% 7% 10% 12% 0.89286 1 0.95238 0.94340 0.93458 0.90909 2 0.90703 0.89000 0.87344 0.82645 0.79719 3 0.86384 0.83962 0.81630 0.75132 0.71178 4 0.82270 0.79209 0.76290 0.68301 0.63552 (rounded to nearest dollar). Use the following table, if

The present value of $66,000 to be received in two years, at 12% compounded annually, is needed. Present Value of $1 at Compound Interest Periods 5% 6% 7% 10% 12% 0.89286 1 0.95238 0.94340 0.93458 0.90909 2 0.90703 0.89000 0.87344 0.82645 0.79719 3 0.86384 0.83962 0.81630 0.75132 0.71178 4 0.82270 0.79209 0.76290 0.68301 0.63552 (rounded to nearest dollar). Use the following table, if

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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A: using the PV function

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.

Question

100%

The present value of $66,000 to be received in two years, at 12% compounded annually, is
needed.
Present Value of $1 at Compound Interest
Periods
5%
6%
7%
10%
12%
1
0.95238
0.94340
0.93458
0.90909
0.89286
2
0.90703
0.89000
0.87344
0.82645
0.79719
3
0.86384
0.83962
0.81630
0.75132
0.71178
4
0.82270
0.79209
0.76290
0.68301
0.63552
5
0.78353
0.74726
0.71299 0.62092
0.56743
6
0.74622
0.70496
0.66634
0.56447
0.50663
7
0.71068
0.66506
0.62275
0.51316
0.45235
8
0.67684
0.62741
0.58201
0.46651 0.40388
9
0.64461
0.59190
0.54393
0.42410
0.36061
10
0.55840
0.38554
0.61391
0.50835
0.32197
Oa. $54,546
Ob. $58,740
Oc. $52,615
Od. $57,647
A
(rounded to nearest dollar). Use the following table, if

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The present value of $40,000 to be received in two years, at 12% compounded annually, is Present Value of $1 at Compound Interest Periods 1 2 3 4 6 7 8 9 10 5% 0.95238 0.90703 0.82270 0.78353 0.74622 0.89000 0.87344 0.86384 0.83962 0.81630 0.79209 0.76290 0.74726 0.71068 0.67684 0.64461 0.61391 a. $40,000 Ob. $48,112 Oc. $8,112 Od. $31,888 6% 0.94340 7% 0.93458 0.70496 0.71299 10% 0.90909 0.82645 0.75132 0.68301 0.62092 0.66634 0.56447 0.66506 0.62275 0.51316 0.62741 0.58201 0.46651 0.59190 0.54393 0.55840 0.50835 0.38554 0.42410 12% 0.89286 0.79719 0.71178 0.63552 0.56743 0.50663 0.45235 0.40388 0.36061 0.32197 (rounded to nearest dollar). Use the following table, if needed.
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