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E6-5 (Computation of Present Value) Using the appropriate interest table, compute the present values
of the following periodic amounts due at the end of the designated periods.
(a) $30,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $30,000 payments to be made at the end of each period for 16 periods at 9%.
(c) $30,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%.
(L0 6,
7)
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Solution Summary
The solution explains how to calculate the present value of the given cash flows
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(a) The time period is 8 and the rate is 12%. Since the amount is receivable at the end of each period (it is an annuity), we use the PVIFA table. From the PVIFA table the factor for 8 periods and 12% is 4.96764
PV is $30,000 X 4.96764 = $149,029.20.
(b) It is the same as ...
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