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Thank you in advance! eBook Present Value of Amounts Due Assume that you are going to receive $590,000 in 10 years. The current market rate
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eBook Present Value of Amounts Due Assume that you are going to receive $590,000 in 10 years. The current market rate of interest is 11%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar b. Why is the present value less than the $590,000 to be received in the future? The present value is less due to the compounding of interest over the 10 years. Check My w Review the time value of money concept. Recall that the time value of money concept recognizes that cash received 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 4 5 6 7 096154 a 92456 088900 0.85480 0.82193 079031 0.75992 073069 070259 067556 0.956M40 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 595% 0.94787 0.89845 0.85161 0.80722 0.76513 0.72525 0.68744 0.65160 0.61763 0.58543 6% 0.94340 0.89000 0.83962 0.79209 0.74726 0.70496 0.66506 0.62741 0.59190 0.55839 61% 0.93897 0.88166 0.82785 0.77732 0.72988 0.68533 0.64351 0.60423 0.56735 0.53273 794 0.93458 0.87344 0.81630 0.76290 0.71299 0.56634 0.62275 0.58201 0.54393 0.50835 10% 0.90909 0.82645 0.75131 0.68301 062092 0.56447 051316 0.46651 0.42410 0.38554 11% 0.90090 0.81 162 0.73119 0.65873 0.59345 0.53464 0.48166 0.43393 039092 0.35218 12% 0.89286 0.79719 0.71178 0.63552 0.56743 0.50663 0.45235 0.10388 0336061 032197 13% 0.88496 0.78315 069305 061332 054276 0.48032 0.42506 037616 033288 0.29459 9 10
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