Please help with accounting problem, just one question: Exhibit 13B-2 chart: 1.

Question

Please help with accounting problem, just one question:

Exhibit 13B-2 chart:

1. Judy Soope just recelved an annual ralse of $800 starting with the current year. If Judy anticipates working for even more years (including the current year) and the cash flows are discounted at 10%, what cash award today would be equilvalent to the pay ralse? (Ignore income taxes.) (Round discount factor(s) to 3 decimal places and your answer to the nearest whole number.) uding the current year) and the Click here to view Exhibit 13B-2 to determine the appropriate discount factor(s) using table. to view Exhibit 138.2 to determine

Explanation / Answer

Present value factor is given by : 1/r* [1-1/(1+r)n]

r=10%

n=11 years including current year so n=10 years

=1/10[1-1/(1+10%)10]

=1/10[1-1/(1.1)11]

=1/10[1-1/(16.431)]

=1/10[1- 0.0608]

=1/10[0.939]

=0.0939

Present value of Anticipated income: $800*10*0.0939=751.31

amount of raise: 800-751.31= 48.69

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