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In: Accounting

Complete the following using present value. (Use the Table provided.)

Complete the following using present value. (Use the Table provided.)

Complete the following using present value. (Use the Table provided.) (Do not round intermediate calculations. Round the PV



Solutions

Expert Solution

Calculation of present value of desired amount at the end of given period

Present value of desired amount at the end of given period = Maturity amount X Present value of $ 1 at 4% at the end of 24 periods

Present value of desired amount at the end of given period = $ 19,400 X 0.3901

                                                                                                              = $ 7,567.94 or $ 7,568 (rounded off)

Therefore the present value of desired amount at the end of given period is $ 7,568.

Note: Since the rate of interest is compounded quarterly, the effective rate of interest to be used in present value calculation is divided by 4 (i.e. 16%/4 = 4%) and the number of years is multiplied by 4 (i.e. 6 x 4 = 24 periods).

ekkarill92 answered 2 years ago
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