
Introduction:
Present value:
The present value of a future amount is the worth of the future amount in the present time. The value of an amount today is not the same as the amount tomorrow or in some future date. The worth /value of an amount changes with time as the amount has a time value. The present value of a future amount is calculated by discounting back the future amount to the present, considering the discount rate and the time period for which the amount is discounted as shown below.
Without applying this formula, the present value is calculated by using the present table. Here, present value is calculated by multiplying the future amount with the present discount factor. The present discount factor depends on the discount rate (i) and the time period (n) and it is found from the present table. The present table provides present discount factor for different values of the discount rate (i) and the time period (n).
Future value:
The future value of a present amount is the worth of the present amount in the future time. The value of an amount today is not the same as the amount tomorrow or in some future date. The worth /value of an amount changes with time as the amount has a time value. The future value of a present amount is calculated by considering the discount rate/interest rate and the time period for which the amount is discounted as shown below.
Without applying this formula, the future value is calculated by using the future table. Here, future value is calculated by multiplying the present amount with the future discount factor. The future discount factor depends on the discount rate (i) and the time period (n) and it is found from the future table. The future table provides future discount factor for different values of the discount rate (i) and the time period (n).
The annual rate of interest for the given investment.

Want to see the full answer?
Check out a sample textbook solution
- Give solution correctly no chatgptarrow_forwardProblem No. 1 On January 1, 2025, Manuel Cruz and Sherimae Diasalo agreed to form a partnership that will manufacture and sell biscuits. The partnership agreement specified that Cruz is to invest cash of P1,000,000 and Diasalo is to contribute land and building to serve as the office and factory of the business. The following amounts are applicable to the property of Diasalo: Acquisition Cost Fair Market Value Land Building P1,000,000 500,000 P1,500,000 850,000 During the formation, it was found out that Cruz has accounts receivable amounting to P70,000 and the partners agreed that it will be assumed by the partnership. The name of the partnership will be Fita Pan. Required: 1. Prepare journal entry to record: a. The investment of Cruz to the partnership b. The investment of Diasalo to the partnershipood relay ni 000,219 2. Prepare the statement of financial position of the partnership as of January 1, 2025 Problem No. 2 The trial balance of Cleint Lumanao Nacho Supplies on February…arrow_forwardA company's stock price is $80, with earnings per share (EPS) of $10 and an expected growth rate of 12%.arrow_forward
- Kazama owns JKL Corporation stock with a basis of $20,000. He exchanges this for $24,000 of STU stock and $8,000 of STU securities as part of a tax-free reorganization. What is Kazama's basis in the STU stock?arrow_forwardKensington Textiles, Inc. manufactures customized tablecloths. An experienced worker can sew and embroider 10 tablecloths per hour. Due to the repetitive nature of the work, employees take a 10-minute break after every 10 tablecloths. Additionally, before starting each batch of 10 tablecloths, workers spend 8 minutes cleaning and setting up their sewing machines. Calculate the standard quantity of direct labor for one tablecloth.arrow_forwardSolvearrow_forward
- Problem: The bank statement balance of $7,000 does not include a check outstanding of $1,000, a deposit in transit of $275, and another company's $250 check erroneously charged against your firm's account. The reconciled bank balance is__?arrow_forwardGiven step by step explanation general accounting questionarrow_forwardQuick answer of this accounting questionsarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





