Financial Accounting, Student Value Edition (12th Edition)
Financial Accounting, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134727066
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
bartleby

Concept explainers

bartleby

Videos

Textbook Question
Book Icon
Chapter F, Problem 1QC

You are calculating the present value of $1,000 that you will receive five years from now. Which table will you use to obtain the present value factor to multiply to calculate the present value of that $1,000?

  1. a. Present Value of $1 table
  2. b. Future Value of $1 table
  3. c. c Present Value of Ordinary Annuity of $1
  4. d. Future Value of Ordinary Annuity of $1
Expert Solution & Answer
Check Mark
To determine

To identify: The table that is used to obtain the present value factor to multiply to compute the present value of $1,000 that will be received after five years.

Answer to Problem 1QC

The appropriate answer is Option (a) Present value of $1 table.

Explanation of Solution

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.

The present value of an investment depends on the following factors:

  • The amount of payment or receipt.
  • The time gap between the investment and future payment or receipt.
  • The interest rate (market interest or stated interest as the case may be).

From the above explanation, it can be concluded that Option (a) Present value of $1 table should be used to compute the present value of $1,000 that will be received after five years,

Hence, Option (a) Present value of $1 table is the correct answer. So, Options (b), (c) and (d) are the incorrect answer.

Conclusion

Therefore, the correct answer is Option (a) Present value of $1 table.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What is the ending total asset balance?
Need solutions asap
Briton manufacturing proces tennis
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Text book image
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
General Structure of an Insurance Contract; Author: The Business Professor;https://www.youtube.com/watch?v=Pg47GBpcykE;License: Standard Youtube License