Click here to view the factor table.https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.) (For calculationpurposes, use 5 decimal places as displayed in the factor table provided.)Click here to view the factor table. What is the present value of $39,000 to be received at the end of each of 20 periods, discounted at 3% compound interest? (Roundanswer to O decimal places, e.g. 458,581.)Present value

Answered: What is the present value of $39,000 to…

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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Click here to view the factor table.

https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf

Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.) (For calculation
purposes, use 5 decimal places as displayed in the factor table provided.)
Click here to view the factor table.

What is the present value of $39,000 to be received at the end of each of 20 periods, discounted at 3% compound interest? (Round
answer to O decimal places, e.g. 458,581.)
Present value

Expert Solution

Context:

Time value of money: The money that is received today and in the future will be different this is because of the discount rate or required rate of return or inflation etc.

Present value of money: Present value of money is the value of money in the present date

Present value of an annuity: The present value of annuity means the present value of future multiple even cash flows

$P = PMT \times \frac{1 - (\frac{1}{{(1 + r)}^{n}})}{r}$

Where P = present value of money

PMT = Even payments

r = rate of interest for a period

n = number of period

P = PMT * PVA

PVA = present value of annuity

For this, we need to use the PVA table and find the rate of interest column and number of period rows and the value in the cell in the row of the rate of interest and column of number of periods will be the PVA