[W 80% 0 ??? 12 24 5 years 30 months Quarterly Monthly E 6-3 Present value; sing

Question

[W 80% 0 ??? 12 24 5 years 30 months Quarterly Monthly E 6-3 Present value; single amounts LO6-32 Determine the present value of the following single amounts: Future Amount $20,000 14,000 25,000 40,000 No. of Periods 10 12 20 Interest Rate 7% 10 E 6-4 Present value; multiple, unequal amounts LO6-3D Determine the combined present value as of December 31.2018, of the following four payments to be receive the end of each of the designated years, assuming an annual interest rate of 8%. Payment $5,000 6.000 Year Received 2019 2020

Explanation / Answer

a. Computation of Present Values

Present Value = Future Value * PVF (r%, n)

1. Present Value = $20000 * PVF (7%, 10) = $20000 * 0.5083 = $10166.00

2. Present Value = $14000 * PVF (8%, 12) = $14000 * 0.3971 = $5559.40

3. Present Value = $25000 * PVF (12%, 20) = $25000 * 0.1037 = $2592.50

4. Present Value = $40000 * PVF (10%, 8) = $40000 * 0.4665 = $18660.00

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