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eBook Present Value of an Annuity Determine the present value of $330,000 to be received at the end of each of four years, using an
eBook Present Value of an Annuity Determine the present value of $330,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows a. By successive computations, using the present value of $1 table in Exhibit S. Round to the nearest whole dollar First year Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar, c. Why is the present value of the four $330,000 cash receipts less than the $1,320,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years Feedback Check My Work Review the time value of money concept. Recall that the time value of money concept recognizes that cash recelved today is worth more than the same amount of cash to be received in the future. Exhibit 5 Present Value of $1 at Compound Interest Periods 1 2 3 4 5 0.96154 0.92456 0.88900 0.85480 0.82193 079031 0.75992 0.73069 0.70259 0.67556 48% 0.956940 0.915730 0.876300 0.838560 0.802450 0.767900 0.734830 0.703190 0.672900 0.643930 5% 0.95238 0.90703 0.86384 0.82270 0.78353 0.74622 0.71068 0.67684 0.64461 0.61391 54% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 0.65160 0.61763 0.58543 6% 0.94340 0.99000 0.83962 0.79209 0.74726 0.70496 0.66506 0.62741 0.59190 0.55839 672% 0.93897 0.88166 0.82785 0.77732 0.72988 0.68533 0.64351 0.60423 0.56735 0.53273 7% 0.93458 0.87344 0.81630 0.76290 0.71299 0.66634 0.62275 0.58201 0.54393 0.50835 10% 090909 0.82645 0.75131 0.68301 0.62092 0.56447 051316 0.46651 0.42410 0.38554 11% 0.90090 0.81162 0.73119 0.65873 0.59345 0.53464 0.48166 0.43393 0.39092 0.35218 12% 0.89286 0.79719 071178 0.63552 0.56743 0.50663 0.45235 0.40388 036061 0.32197 13% 0.85496 078315 0.69305 0.61332 054276 0.48032 0.42506 037616 033288 0.29459 7 3 9 10 Exhibit 7 Present Value of an Annuity of $1 at Compound Interest Periods 1 2 3 4 5 6 7 8 9 10 4% 0.96154 1.88609 2.77509 3.62990 445182 5.24214 6.00205 6.73274 7.43533 8.11090 4%% 0.95694 1.87267 2.74896 3.58753 4.38998 5.15787 5.89270 6.59589 7.26879 7.91272 5% 0.95238 1.85941 2.72325 3.54595 432948 5.07569 5.78637 646321 7.10782 7.72173 5%% 0.94787 1.84632 2.69793 3.50515 4.27028 4.99553 5.68297 6.33457 6.95220 7.53763 6% 0.94340 1.83339 267301 3.46511 4.21236 4.91732 5.58238 6.20979 6.80169 7.36009 6%% 0.93897 1.82063 2.64848 3.42580 4.15568 4.84101 5.48452 6.08875 6.65610 7.18883 7% 0.93458 1.80802 2.62432 3.38721 4.10020 476654 5.38929 5.97130 6.51523 7.02358 10% 0.90909 1.73554 248685 3.16987 3.79079 435526 4.86842 5.33493 5.75902 6.14457 11% 0.90090 1.71252 244371 3.10245 3.69590 4.23054 471220 5.14612 5.53705 5.88923 12% 0.89286 1.69005 240183 3.03735 3.60478 4.11141 4.56376 4.96764 532825 5.65022 13% 0.88496 1.66810 236115 2.97447 3.51723 3.99755 4.42261 4.79677 5.13166 5.42624
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