Determine the present value of $250,000 to be received at the end of each of 4 years, using an interest rate of 5%, compounded annually, as follows:a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar.First year44,325 XSecond YearThird YearFourth YearTotal present valueb. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.c. Why is the present value of the four $250,000 cash receipts less than the $1,000,000 to be received in the future?The present value is less due to iover the 4 years.

When considering the opportunity cost of having money now rather than later, present value indicates…

Answered: the present value of using an interest…

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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Find the future value of $1 000 at 7.8% p.a. simple interest over 14 months.
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Using Table 11-1, calculate the compound amount and compound interest (in $) for the investment. (Round your answers to the nearest cent.) Principal TimePeriod (years) NominalRate (%) InterestCompounded CompoundAmount CompoundInterest $8,000 4 12 annually $ ?? $ ??
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the present value of using an interest rate of 5%, a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year 44,325 X to be fe ved at the end of