Concept introduction:
Present Value:
Present value of money means the present or current value of a future
Future Value:
The future value is the value of present cash flow at specified time period and at specified
Requirement 1:
We have to determine the amount to be deposited today.
Answer to Problem 18E
The amount to be deposited today will be $42480.
Explanation of Solution
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 2:
We have to determine the amount to be deposited today.
Answer to Problem 18E
The amount to be deposited today will be $12855
Explanation of Solution
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 3:
We have to determine the best option among the two.
Answer to Problem 18E
We will have $463 now as the future value of $463 after 10 years will be $1096.1062 which is greater than $1000.
Explanation of Solution
We will have $463 now as the future value of $463 after 10 years will be $1096.1062 which is greater than $1000.
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 4:
We have to determine the cost of sticker in eight years.
Answer to Problem 18E
The cost of sticker in eight years will be $132.975
Explanation of Solution
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 5:
We have to determine the cost of new home after eight years.
Answer to Problem 18E
The cost of new home after eight years will be $339,760.60
Explanation of Solution
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 6:
We have to determine the amount of today’s investment.
Answer to Problem 18E
The amount of today’s investment will be $10852.32
Explanation of Solution
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 7:
We have to determine the present value of given situation.
Answer to Problem 18E
The present value of amount will be $5,734,500
Explanation of Solution
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Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College