Answered: What is the future value for $2000 for…

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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What is the future value for $2000 for 7 years at 8% interest and with an additional $2500 added at end of 4 year.

Then what is the present value of $2000 at 7 years with 8% interest and with additional $2500 added at end of 4th year.

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Expert Solution

Step 1

Future value:

Future value of an investment is determined using the appropriate discount factors.

$F V = P V {(1 + r)}^{n} w h e r e, F V = F u t u r e v a l u e P V = P r e s e t v a l u e r = I n t e r e s t r a t e n = N u m b e r o f p e r i o d s$

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