Managerial Accounting
5th Edition
ISBN: 9781259176494
Author: John J Wild, Ken Shaw Accounting Professor
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter B, Problem 1QS
To determine
Concept introduction:
Time value of money: Time value of money is the concept that differentiates the value of money received today and the value of same money received in future. According to this concept, the same amount of money to be received in future shall have lower present value (value of the money today) due to the interest that could be earned on that money.
To indicate:
The interest rate column and number of period for each of the given case
Expert Solution & Answer
Answer to Problem 1QS
The interest rate column and number of period for each of the given case are as follows:
| Case # | Rate Column | Number of Periods Row |
| 1 | 2% | 8 |
| 2 | 12% | 2 |
| 3 | 3% | 4 |
| 4 | 1% | 24 |
Explanation of Solution
The interest rate column and number of period for each of the given case are as follows:
| Case # | Annual Rate | Number of Compounding in a year | Rate Column | Number of Periods Row |
| A | B | C = A/B | D = 2*B | |
| 1 | 8% | 4 | 2% | 8 |
| 2 | 12% | 1 | 12% | 2 |
| 3 | 6% | 2 | 3% | 4 |
| 4 | 12% | 12 | 1% | 24 |
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