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## Test Bank Financial Accounting Information for Decisions 9th Edition By John Wild A+

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Test Bank Financial Accounting Information for Decisions 9th Edition By John Wild A+

1) Interest is the borrower's payment to the owner of an asset, for its use.

Difficulty: 1 Easy

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

2) From the perspective of an account holder, a savings account is a liability with interest.

Difficulty: 1 Easy

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

3) An interest rate is also called a discount rate.

Difficulty: 1 Easy

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

4) Present and future value computations enable companies to measure or estimate the interest component of holding assets or liabilities over time.

Difficulty: 2 Medium

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Measurement

5) The number of periods in a present value calculation may only be expressed in years.

Difficulty: 1 Easy

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

6) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

The present value factor for determining the present value of \$6,300 to be received three years from today at 10% interest compounded semiannually is 0.7462. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Measurement

7) The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know the worth of the asset at the future date.

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Measurement

8) In a present value or future value table, the length of one time period may be interpreted as one year, one month, or any other length of time.

Difficulty: 1 Easy

Topic: Present Value of a Single Amount; Future Value of Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.; B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

9) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

The present value of \$2,000 to be received nine years from today at 8% interest compounded annually is \$1,000.40. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Explanation: Present Value = Future Value × Interest Factor for 9 years @8%

Present Value = \$2,000 × 0.5002 = \$1,000.40

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement

10) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

Sandra has a savings account that has accumulated to \$50,000. She started with \$28,225, and earned interest at 10% compounded annually. It took her five years to accumulate the \$50,000. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Explanation: PV Factor = Present Value/Future Value PV Factor = \$28,225/\$50,000 = 0.5645 0.5645 is the present value of 1 factor, 10%, 6 periods

Difficulty: 3 Hard

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement; BB Critical Thinking

11) Future value can be found if the interest rate (i), the number of periods (n), and the present value (p) are known.

Difficulty: 1 Easy

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

12) The number of periods in a future value calculation may only be expressed in years.

Difficulty: 1 Easy

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

The future value of \$100 compounded semiannually for 3 years at 12% equals \$140.49. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Explanation: Future Value = Present Value × Interest Factor

Future Value = \$100 × 1.4185 = \$141.85

Difficulty: 2 Medium

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement

14) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

At an annual interest rate of 8% compounded annually, \$5,300 will accumulate to a total of \$7,210.65 in 5 years. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Explanation: FV Factor = Future Value/Present Value FV Factor = \$7,210.65/\$5,300 = 1.3605 1.3605 is the future value of \$1 factor, 8%, 4 periods

Difficulty: 3 Hard

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement

15) An annuity is a series of equal payments occurring at equal intervals.

Difficulty: 1 Easy

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

16) The present value of an annuity table can be used to determine the value today of a series of payments to be received in the future.

Difficulty: 1 Easy

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

17) A series of equal payments made or received at the end of each period is an ordinary annuity.

Difficulty: 1 Easy

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

18) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

The present value of \$5,000 per year for three years at 12% compounded annually is \$12,009. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Explanation: 2.4018 is the PV factor on the Present Value of an Annuity table; n = 3; i = 12%

Present Value of an Annuity = Annuity × PV Factor

Present Value of an Annuity = \$5,000 × 2.4018 = \$12,009

Difficulty: 3 Hard

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

19) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

Present Value of an Annuity = Annuity × PV Factor

Present Value of an Annuity = \$10,000 × 3.4651 = \$34,651.

Difficulty: 3 Hard

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

20) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

The present value of eight \$5,000 semiannual payments invested for 4 years at 8% compounded semiannually is \$33,663.50. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Explanation: 6.7327 is the PV factor on the Present Value of an Annuity table; n = 8; i = 4%

Present Value of an Annuity = Annuity × PV Factor

Present Value of an Annuity = \$5,000 × 6.7327 = \$33,663.50.

Difficulty: 3 Hard

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

21) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

With deposits of \$5,000 at the end of each year, you will have accumulated \$38,578 at the end of the sixth year if the annual rate of interest is 10%. (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

Explanation: 7.7156 is the FV factor on the Future Value of an Annuity table; n = 6; i = 10%

Future Value of an Annuity = Annuity × FV Factor

Future Value of an Annuity = \$5,000 × 7.7156 = \$38,578

Difficulty: 3 Hard

Topic: Future Value of an Annuity

Learning Objective: B-P4 Apply future value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

22) The future value of an ordinary annuity is the accumulated value of each annuity payment excluding interest as of the date of the final payment.

Difficulty: 2 Medium

Topic: Future Value of an Annuity

Learning Objective: B-P4 Apply future value concepts to an annuity by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

23) Interest may be defined as:

A) Time.

B) A borrower's payment to the owner of an asset for its use.

C) The future value of a present amount.

D) Always a liability.

E) Always an asset.

Difficulty: 1 Easy

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

24) If we want to know the value of present-day assets at a future date, we can use:

A) Present value computations.

B) Annuity computations.

C) Interest computations.

D) Future value computations.

E) Earnings computations.

Difficulty: 2 Medium

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

25) Which interest rate column would you use from a present value or future value table for 8% interest compounded quarterly?

A) 12%

B) 6%

C) 3%

D) 2%

E) 1%

Explanation: An 8% annual interest rate is divided by 4 to find the quarterly rate.

Difficulty: 2 Medium

Topic: Present Value of a Single Amount; Future Value of Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.; B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

26) Which column (i) and row (n) would you use from a present value or future value table for 8% interest compounded quarterly for 6 years?

A) (i) = 2%, (n) = 8

B) (i) = 8%, (n) = 6

C) (i) = 2%, (n) = 24

D) (i) = 4%, (n) = 12

E) (i) = 4%, (n) = 24

Explanation: (i) = 8% annual interest rate divided by 4 = 2% quarterly rate.

(n) = 6 years x 4 quarters per year = 24 quarterly periods.

Difficulty: 2 Medium

Topic: Present Value of a Single Amount; Future Value of Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.; B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

27) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

A company is considering investing in a project that is expected to return \$350,000 four years from now. How much is the company willing to pay for this investment if the company requires a 12% return? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

A) \$55,606

B) \$137,681

C) \$222,425

D) \$265,764

E) \$350,000

Explanation: The PV factor on the Present Value table when n = 4 and i = 12% is 0.6355

Present Value = Future Value × PV Factor

Present Value = \$350,000 × 0.6355 = \$222,425

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

28) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

Hao made a single investment which, after 5 years invested at 12% compounded semiannually, has accumulated to \$214,900. How much did Hao invest initially? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

A) \$214,896

B) \$160,584

C) \$211,476

D) \$120,000

E) \$ 21,486

Explanation: The PV factor on the Present Value table when n =10 and i = 6% is 0.5584

Present Value = Future Value × PV Factor

Present Value = \$214,900 × 0.5584 = \$120,000

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

29) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

Molly borrows money by promising to make a single payment of \$100,000 at the end of 5 years. How much money is Molly able to borrow if the interest rate is 10%, compounded semiannually? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

A) \$38,550

B) \$78,350

C) \$62,090

D) \$74,850

E) \$61,390

Explanation: The PV factor on the Present Value table when n =10 and i = 5% is 0.6139

Present Value = Future Value × PV Factor

Present Value = \$100,000 × 0.6139 = \$61,390

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

30) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

Jason has a loan that requires a single payment of \$4,000 at the end of 3 years. The loan's interest rate is 6%, compounded semiannually. How much did Jason borrow? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

A) \$3,358.40

B) \$4,000.00

C) \$3,660.40

D) \$4,776.40

E) \$3,350.00

Explanation: 3 years = 6 semiannual periods; 6% annual interest = 3% semiannually

The PV factor on the Present Value table when n = 6 and i = 3% is 0.8375

Present Value = Future Value × PV Factor

Present Value = \$4,000 × 0.8375 = \$3,350.00

Difficulty: 3 Hard

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

31) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

C) \$6,000

D) \$8,836

E) \$8,306

Explanation: The PV factor on the Present Value table when n = 6 and i = 6% is 0.7050

Present Value = Future Value × PV Factor

Present Value = \$10,000 × 0.7050 = \$7,050.00

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

32) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

Paul wants to invest a sum of money today that will accumulate to \$50,000 at the end of 4 years. Assuming he can earn an interest rate of 8% compounded semiannually, how much must he invest today? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

A) \$36,535

B) \$27,015

C) \$42,740

D) \$36,750

E) \$31,414

Explanation: The PV factor on the Present Value table when n = 8 and i = 4% is 0.7307

Present Value = Future Value × PV Factor

Present Value = \$50,000 × 0.7307 = \$36,535.

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

33) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

Marshall has received an inheritance and wants to invest a sum of money today that will yield \$5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

A) \$50,000.00

B) \$47,500.00

C) \$45,125.00

D) \$38,608.50

E) \$100,000.00

Explanation: The PV factor on the Present Value of an Annuity table when n = 10 and i = 5% is 7.7217

Present Value = Future Annuity Value × PV Factor

Present Value = \$5,000 × 7.7217 = \$38,608.50

Difficulty: 2 Medium

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

34) Present Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220

Future Value of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058

Present Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502

Future Value of an Annuity of 1

 Periods 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487

Cody invests \$1,800 per year from his summer wages at a 4% annual interest rate. He plans to take a European vacation at the end of 4 years when he graduates from college. How much will he have available to spend on his vacation? (PV of \$1, FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.)

A) \$7,787.52

B) \$7,488.00

C) \$6,912.00

D) \$7,200.00

E) \$7,643.70

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