alect the decision to sell the truck? Present value calculations Using a present value table, your calculator, or a com- puter program present value function, calculate the present value of: a. A car down payment of $9,000 that will be required in two years, assuming an interest rate of 10%. Exercise 6.15 LO 10 Part 1 Financial Accounting b. A lottery prize of $18 million to be paid at the rate of $900,000 per year for 20 years, assuming an interest rate of 10%. c. The same annual amount as in part b, but assuming an interest rate of 14%. d. A financing lease obligation that calls for the payment of $24,000 per year for 10 years, assuming a discount rate of 8%. Chapter 6 Accounting for and Presentation of Popy Pat and pipes, and Oder N Present Value of an Annuity The preceding example deals with the present value of a single amount to be received or paid in the future. Some transactions involve receiving or paying the same amount cach period for a number of periods. This sort of receipt or payment pattern is referred to as an annuity. The present value of an annuity is the sum of the present value of each of the annuity payment amounts. There are formulas and computer program functions for calculating the pres ent value of a single amount and the present value of an annuity (see Business in Practice Using Financial Calculators). In all cases, the amount to be received or paid in the future, the discount rate, and the number of years (or other time periods) are used in the present value calculation. Table 6-4 presents factors for calculating the Factors for Calculating the Present Value of $1 Table 6.4 Discount Rate No. of Periods 2% 4% 6% 8% 10% 12% 0980 09615 0.9434 09259 09091 0961 09246 0.8900 08573 08264 0.942 0.8890 08396 07938 0.7513 14% 08929 0.8772 0.8621 0.7972 07695 07432 0.7118 06750 10% 10% 20% 08475) 108333 07182 06944 06407 06085 05787 4 0924 0.8548 0.7921 07350 06830 05921 0.6355 0.5523 05158 04823 5 0906 0.8219 0.7473 06806 0.6209 0.5674 05194 04761 04371 4019 6 0.888 0.7903 0.7050 06302 05645 0.5066 04556 04104 0.3704 03349 2 0.871 07599 0.6651 05835 05132 0853 07307 0.6274 0.5403 04665 D 0837 0.7026 0.5919 0.5002 04241 10 0820 06756 05584 0.4632 0.3855 0.4523 0:3996 04039 03506 0.3075 03006 03220 02697 03538 03139 02791 0.3050 02660 02326 02630 02267 02255 01938 0.1911 01615 11 0.804 0.6496 0.5268 0.4289 03505 02875 12 0.788 06246 0.4970 03971 03186 13 0773 06006 0.4688 03677 0.2897 0.2567 0.2292 14 0758 0.5775 04423 0.3405 0,2633 0.2046 15 0.743 05553 04173 03152 0.2394 0.1827 0.1597 0.1401 02366 0.1619 0.1954 02076 0.1685 0.1821 01452 0.1163 00935 0.1252 0.0985 0.1079 03346 0.1372 01122 00779 0.0835 00640 16 0.728 0.5339 03936 02919 0.2176 0.1631 0.1229 0.0930 0.0708 00541 17 0714 05134 03714 0.2703 0.1978 0.1456 0.1078 18 0.700 04936 03503 19 0,686 04746 03305 20 0.673 0.4564 0.3118 0.2502 02317 0.1635 02145 0.1486 0.1799 0.1037 00802 0.0600 01300 0.0946 0.0691 0.0508 0.1161 0.0829 0.0596 0.0431 0.0728 00514 0.0365 0.0451 00376 0.0313 00261 21 0660 0.4388 0.2942 0.1987 0.1351 22 0647 04220 02775 01839 23 0634 0.4057 0.2618 0.1703 24 0.622 0.3901 0.2470 0.1577 25 0610 0.3751 02330 0.1460 30 35 0.552 03083 0.1741 0.500 02534 0.1301 0.0994 40 0.453 0.2083 0.0972 00676 00460 00221 0.0573 0.0356 00926 0:0638 00443 0.0309 01228 0.0826 0.0560 00382 00262 0.1117 0.0738 00491 00329 00222 00151 0.1015 0.0659 0.0431 00284 0.0188 0.0126 00923 0.0588 00378 0.0245 0.0160 0.0105 0,0334 0.0189 0.0217 0.0181 45 0410 01712 0.0727 0.0313 50 0.372 0.1407 0.0543 00213 00137 0.0085 00196 00116 00070 0.0042 00102 0.0055 0.0030 0.0017 0.0107 0.0053 0.0026 0.0013 0.0007 0.0061 0.0027 0.0013 0.0006 0.0003 0.0035 0.0014 0.0006 0.0003 0.0001 214 Table 6.5 Part 1 Financial Accing Factors for Calculating the Present Ve of an Anuty of $1 Discount Rate No. of Periods 2% 45 B 10% 125 14% 10% 10% 20% 0960 09615 09434 09299 05051 08929 08772 08621 08475 08333 1.942 1.8861 18334 1.7833 2.884 27751 26730 3.808 5 4.713 1.6501 25771 24869 2.4018 23216 3.6299 34651 33121 31699 30373 44518 42124 39927 32908 3.6048 1.7355 16467 16062 15656 15278 22459 21743 2/1065 29137 34331 27982 26901 25887 32743 31272 29905 B 5.601 5.2421 49173 46229 7 6.472 6.0021 55824 7325 6.7327 62098 9 8102 TO 8983 74353 6.8017 8.1109 43563 41114 38887 36847 52064 4.8684 45638 42883 4.0386 57466 53349 49675 46389 43436 62469 57590 53282 73601 67101 61445 5.6502 48032 3.4976 38115 3.6046 40776 49464 4.6065 4.3030 52161 3.3255 38372 4.0310 44941 41925 11 9.787 8.7605 73669 71390 64951 59377 54527 50286 46560 43271 12 10.575 93851 83838 75361 68137 51944 56603 5.1971 4.7932 44392 13 11.348 14 12106 15 9.9856 88527 105631 92950 12.849 111184 9.7122 7.9038 71034 64235 58424 53423 4.9095 45327 8.2442 73667 85595 76061 16 17 18 13.578 116523 10.1059 88514 78237 14.292 12.1657 10.4773 91216 14.992 12.6593 108276) 93719 80216 82014 66282 60021 68109 61422 69740 62651 56685 51424 71196 6.3729 57482 54675 5.0081 46106 5.5755 50916 40755 4.7296 52223 47746 22497 64674 5.8178 52732 48122 19 15678 131339 117581 96036 83649 73658 65504 58775 53162 4.8435 20 16.351 13.5903 114699 98181 85136 74684 66237 59288 5.3527 48696 21 17.011 14.0292 11.7641 100168 8.6487 75620 66870 59731 53837 43913 22 17.658 14.4511 120416 10.2007 8.7715 76446 67429 60113 54099 4.9094 23 18.292 148568 12.3034 10.3711 88832 77184 67921 6.0442 54321 49245 24 18914 15.2470 12 5504 10.5288 89847 25 19.523 15.6221 12.7834 106748 90770 7.7843 68351 78431 60726 54509 49371 68729 60971 54669 49476 30 22.396 17.2920 137648 11:2578 9.4269 35 24.999 18.6646 14.4982 116546 9.6442 80552 81755 70027 5.1772 5.5168 49789 40 45 50 27.355 19.7928 15.0463 11.9246 9.7791 29.490 20.7200 15.4558 12.1084 98628 31.424 21.4822 15.7619 12.2335 99148 83045 7.1327 8.2438 70700 7.1050 6.2153 5.5386 6.2335 4.9915 55482 4.9966 8.2825 7.1232 62421 55523 4.9986 62463 5.5541 49995