What Is the Present Value of $8,000 to Be Received

question 169

Short Answer

What is the present value of $8,000 to be received at the end of 6-years if the required rate of return is 15%?
Below is a table for the present value of $1 at compound interest. $$\begin{array} { l l l l } \text { Year } & 15 \% & \text { Year } & 15 \% \\\hline 1 & 0.870 & 6 & 0.432 \\2 & 0.756 & 7 & 0.376 \\3 & 0.658 & 8 & 0.327 \\4 & 0.572 & 9 & 0.284 \\5 & 0.497 & 10 & 0.247\end{array}$$ Below is a table for the present value of an annuity of $1 at compound interest. $\begin{array}{llll}\text { Year } & 15 \% & \text { Year } &15 \%\\\hline1 & 0.870 & 6 & 3.785 \\2 & 1.626 & 7 & 4.160 \\3 & 2.283 & 8 & 4.487 \\4 & 2.855 & 9 & 4.772 \\5 & 3.353 & 10 & 5.019\end{array}$

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Definitions:

Supplies

Items used in the operation of a business or in the production of goods and services that are typically consumed within a short period.

Purchased

Acquisition of goods or services in exchange for money or its equivalent.

Required

Mandatory or necessary conditions or items specified for a particular purpose or activity.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.