Present value: Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower. Present value of an amount = Future value ( 1 + interest rate ) number of periods Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula: Future value of an amount = Present value × ( 1+ Interest rate ) Number of periods To determine: The Interest rate implicit in this agreement.

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Answer 1

Question

Chapter 5, Problem 5.19E

To determine

Present value:

Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.

$Present value of an amount = Future value(1 + interest rate)number of periods$

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

$Future value of an amount = Present value×(1+ Interest rate)Number of periods$

To determine: The Interest rate implicit in this agreement.

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Answer 2

Question

Chapter 5, Problem 5.19E

To determine

Present value:

Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.

$Present value of an amount = Future value(1 + interest rate)number of periods$

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

$Future value of an amount = Present value×(1+ Interest rate)Number of periods$

To determine: The Interest rate implicit in this agreement.

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Answer 3

Question

Chapter 5, Problem 5.19E

To determine

Present value:

Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.

$Present value of an amount = Future value(1 + interest rate)number of periods$

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

$Future value of an amount = Present value×(1+ Interest rate)Number of periods$

To determine: The Interest rate implicit in this agreement.

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Answer 4

Question

Chapter 5, Problem 5.19E

To determine

Present value:

Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.

$Present value of an amount = Future value(1 + interest rate)number of periods$

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

$Future value of an amount = Present value×(1+ Interest rate)Number of periods$

To determine: The Interest rate implicit in this agreement.

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Answer 5

Chapter 5, Problem 5.19E

To determine

Present value:

Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.

$Present value of an amount = Future value(1 + interest rate)number of periods$

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

$Future value of an amount = Present value×(1+ Interest rate)Number of periods$

To determine: The Interest rate implicit in this agreement.

Answer 6

Chapter 5, Problem 5.19E

To determine

Present value:

Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.

$Present value of an amount = Future value(1 + interest rate)number of periods$

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

$Future value of an amount = Present value×(1+ Interest rate)Number of periods$

To determine: The Interest rate implicit in this agreement.

Answer 7

Chapter 5, Problem 5.19E

To determine

Present value:

Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.

$Present value of an amount = Future value(1 + interest rate)number of periods$

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

$Future value of an amount = Present value×(1+ Interest rate)Number of periods$

To determine: The Interest rate implicit in this agreement.

Answer 8

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Answer 10

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Answer 11

Ch. 5 - Prob. 5.1Q Ch. 5 - Explain compound interest.Ch. 5 - Prob. 5.3Q Ch. 5 - Prob. 5.4Q Ch. 5 - Prob. 5.5Q Ch. 5 - Prob. 5.6Q Ch. 5 - What is an annuity?Ch. 5 - Explain the difference between an ordinary annuity...Ch. 5 - Prob. 5.9Q Ch. 5 - Prepare a time diagram for the present value of a...

Solution Summary: The author explains that present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows.

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Chapter 5 Solutions