Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Flaherty is considering an investment that, if paid for immediately, is expected to return $158,000 five years from now. If Flaherty demands a 15% return,

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Flaherty is considering an investment that, if paid for immediately, is expected to return $158,000 five years from now. If Flaherty demands a 15% return, how much is she willing to pay for this investment? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided. Round your "PV of a single amount" to 4 decimal places and final answer to the nearest whole dollar.) Table B.1* Present Value of 1 p=1/(1+i)n \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Periods } & \multicolumn{13}{|c|}{ Rate } \\ \hline & 1% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 12% & 15% & Periods \\ \hline 1 & 0.9901 & 0.9804 & 0.9709 & 0.9615 & 0.9524 & 0.9434 & 0.9346 & 0.9259 & 0.9174 & 0.9091 & 0.8929 & 0.8696 & 1 \\ \hline 2 & 0.9803 & 09612 & 0.9426 & 0.9246 & 0.9070 & 0.8900 & 0.8734 & 0.8573 & 0.8417 & 0.8264 & 0.7972 & 0.7561 & 2 \\ \hline 3 & 0.9706 & 0.9423 & 0.9151 & 0.8890 & 0.8638 & 0.8396 & 0.8163 & 0.7938 & 0.7722 & 0.7513 & 0.7118 & 0.6575 & 3 \\ \hline 4 & 0.9610 & 0.9238 & 0.8885 & 0.8548 & 0.8227 & 0.7921 & 0.7629 & 0.7350 & 0.7084 & 0.6830 & 0.6355 & 0.5718 & 4 \\ \hline 5 & 0.9515 & 0.9057 & 0.8626 & 0.8219 & 0.7835 & 0.7473 & 0.7130 & 0.6806 & 0.6499 & 0.6209 & 0.5674 & 0.4972 & 5 \\ \hline 6 & 0.9420 & 0.8880 & 0.8375 & 0.7903 & 0.7462 & 0.7050 & 0.6663 & 0.6302 & 0.5963 & 0.5645 & 0.5066 & 0.4323 & 6 \\ \hline 7 & 0.9327 & 0.8706 & 0.8131 & 0.7599 & 0.7107 & 0.6651 & 0.6227 & 0.5835 & 0.5470 & 0.5132 & 0.4523 & 0.3759 & 7 \\ \hline 8 & 0.9235 & 0.8535 & 0.7894 & 0.7307 & 0.6768 & 0.6274 & 0.5820 & 0.5403 & 0.5019 & 0.4665 & 0.4039 & 0.3269 & 8 \\ \hline 9 & 0.9143 & 0.8368 & 0.7664 & 0.7026 & 0.6446 & 0.5919 & 0.5439 & 0.5002 & 0.4604 & 0.4241 & 0.3606 & 0.2843 & 9 \\ \hline 10 & 0.9053 & 0.8203 & 0.7441 & 0.6756 & 0.6139 & 0.5584 & 0.5083 & 0.4632 & 0.4224 & 0.3855 & 0.3220 & 0.2472 & 10 \\ \hline 11 & 0.8963 & 0.8043 & 0.7224 & 0.6496 & 0.5847 & 0.5268 & 0.4751 & 0.4289 & 0.3875 & 0.3505 & 0.2875 & 0.2149 & 11 \\ \hline 12 & 0.8874 & 0.7885 & 0.7014 & 0.6246 & 0.5568 & 0.4970 & 0.4440 & 0.3971 & 0.3555 & 0.3186 & 0.2567 & 0.1869 & 12 \\ \hline 13 & 0.8787 & 0.7730 & 0.6810 & 0.6006 & 0.5303 & 0.4688 & 0.4150 & 0.3677 & 0.3262 & 0.2897 & 0.2292 & 0.1625 & 13 \\ \hline 14 & 0.8700 & 0.7579 & 0.6611 & 0.5775 & 0.5051 & 0.4423 & 0.3878 & 0.3405 & 0.2992 & 0.2633 & 0.2046 & 0.1413 & 14 \\ \hline 15 & 0.8613 & 0.7430 & 0.6419 & 0.5553 & 0.4810 & 0.4173 & 0.3624 & 0.3152 & 0.2745 & 0.2394 & 0.1827 & 0.1229 & 15 \\ \hline 16 & 0.8528 & 0.7284 & 0.6232 & 0.5339 & 0.4581 & 0.3936 & 0.3387 & 0.2919 & 0.2519 & 0.2176 & 0.1631 & 0.1069 & 16 \\ \hline 17 & 0.8444 & 0.7142 & 0.6050 & 0.5134 & 0.4363 & 0.3714 & 0.3166 & 0.2703 & 0.2311 & 0.1978 & 0.1456 & 0.0929 & 17 \\ \hline 18 & 0.8360 & 0.7002 & 0.5874 & 0.4936 & 0.4155 & 0.3503 & 0.2959 & 0.2502 & 0.2120 & 0.1799 & 0.1300 & 0.0808 & 18 \\ \hline 19 & 0.8277 & 0.6864 & 0.5703 & 0.4746 & 0.3957 & 0.3305 & 0.2765 & 0.2317 & 0.1945 & 0.1635 & 0.1161 & 0.0703 & 19 \\ \hline 20 & 0.8195 & 0.6730 & 0.5537 & 0.4564 & 0.3769 & 0.3118 & 0.2584 & 0.2145 & 0.1784 & 0.1486 & 0.1037 & 0.0611 & 20 \\ \hline 25 & 0.7798 & 0.6095 & 0.4776 & 0.3751 & 0.2953 & 0.2330 & 0.1842 & 0.1460 & 0.1160 & 0.0923 & 0.0588 & 0.0304 & 25 \\ \hline 30 & 0.7419 & 0.5521 & 0.4120 & 0.3083 & 0.2314 & 0.1741 & 0.1314 & 0.0994 & 0.0754 & 0.0573 & 0.0334 & 0.0151 & 30 \\ \hline 35 & 0.7059 & 0.5000 & 0.3554 & 0.2534 & 0.1813 & 0.1301 & 0.0937 & 0.0676 & 0.0490 & 0.0356 & 0.0189 & 0.0075 & 35 \\ \hline 40 & 0.6717 & 0.4529 & 0.3066 & 0.2083 & 0.1420 & 0.0972 & 0.0668 & 0.0460 & 0.0318 & 0.0221 & 0.0107 & 0.0037 & 40 \\ \hline \end{tabular} rate of 5% ), the factor is 0.5568 . You would need to invest $2,784 today ($5,0000.5568). Table B. 2 Future Value of 1 f=(1+i)n

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Practice And Principles

Authors: Jan Bebbington, M. Richard Laughlin, Robert H. Gray, Gray Dave

3rd Edition

1861527713, 978-1861527714

More Books

Students also viewed these Accounting questions