What is the fair value of the grant payments according to the Financial Accounting Standards Board (FASB)? $130,000 $115,748 $125,000 $111,295
What is the fair value of the grant payments according to the Financial Accounting Standards Board (FASB)? $130,000 $115,748 $125,000 $111,295
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A student will receive a $25,000 grant at the beginning of every year for the next five years. Assuming an annual interest rate of 4% is appropriate, the present value of an ordinary annuity is 4.4518 x $25,000 = $111,295, and the present value of an annuity due is 4.6299 x $25,000 = $115,748.
What is the fair value of the grant payments according to the Financial Accounting Standards Board (FASB)?
- $130,000
- $115,748
- $125,000
- $111,295
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