Home Read, Study & Practice Assignment Gradebook ORION Downloadable eTextbook As

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Home Read, Study & Practice Assignment Gradebook ORION Downloadable eTextbook Assignment>Open Assignment CALCULATOR FULL SCREEN PRINTER VERSION ·BACK NEXT ASSIGNMENT RESOURCES Appendix G Graded HW Brief Exercise G-6 Brief Exercise G-9 (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) what is the present value of $25,000 due 8 periods from now, discounted at 4%? (Round answer to 2 decimal places, e.g. 25.25.) Review Score Review Results by Study Objective Present value s (b) what is the present value of $25,000 to be received at the end of each of 4 periods, discounted at 4%? (Round answer to 2 decimal places, e.g. 25.25.) Present value LINK TO TEXT Question Attempts: o of 2 used SAVE FOR LATER SUBMITA

Explanation / Answer

(a).

Present value of $25000 at 4% discount rate for 8 periods:

As per table future value of 1 at 4% discount factor for 8 periods is 1.36857

Thus present value of $25000 will be;

$25000 / 1.36857 = $18267.24

(b).

Present value of $25000 at 4% discount rate to be received at the end of each of 4 periods:

As per table future value of 1 at 4% discount factor for 1 period is 1.04000

$25000 / 1.04000 = $24038.46

As per table future value of 1 at 4% discount factor for 2 periods is 1.08160

$25000 / 1.08160 = $23113.90

As per table future value of 1 at 4% discount factor for 3 periods is 1.12486

$25000 / 1.12486 = $22224.99

As per table future value of 1 at 4% discount factor for 4 periods is 1.16986

$25000 / 1.16986 = $21370.08

Thus total present value ($24038.46 + $23113.90 + $22224.99 + $21370.08) = $90747.43

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