The Following Problem Requires Some of the Following Present Value

question 25

Essay

The following problem requires some of the following present value information:
$$\begin{array} { | l | l | } \hline \text { pV af an ardinary annuity for } 20 \text { periods at } 12 \% & 7.46944 \\\hline \text { pV af an ordinary annuity for } 19 \text { periods at } 12 \% & 8.36497 .36578 \\\hline \text { pV af an ordinary annuty for } 18 \text { periods at } 10 \% 12 \% & 8.20147 .24967 \\\hline \text { pV of } 1 \text { for } 20 \text { periods at } 10 \% 12 \% & 0.10367\end{array}$$
Bioco sold a patent on a new laser process to Agent Co.The sales agreement which was signed on January 1,2011 requires Agent Co.to pay Bioco $2 million immediately.In addition,Agent is required to pay 500,000 each December 31 for 20 years starting with December 31,2011.Agent and Bioco estimate that 12 percent is an appropriate interest rate for this arrangement.
Required: a.Compute the present value of the receivable on Bioco's books on January 1,2011 immediately after receiving the $1 million down payment.
b.Compute the present value of the receivable on Biotech's books on December 31,2011.
c.Compute the present value of the receivable on Biotech's books on December 31,2012.

---

Definitions:

Sexual Encounters

Interactions between individuals that involve sexual activity or the expression of sexual feelings.

Scripts

Defined as structured sequences of behavior or actions expected to be followed in specific contexts or situations.

Sensate Focus Therapy

Treatment for sexual dysfunction in which partners alternate between giving and receiving stimulation in a relaxed, openly communicative atmosphere in order to reduce performance anxiety and concern over achieving orgasm by learning each partner’s sexual fulfillment needs.

Intercourse

Sexual activity, especially involving penetrative sex between two or more individuals.