Use the Following Tables to Calculate the Present Value of a $25,000

question 63

Essay

Use the following tables to calculate the present value of a $25,000, 7%, 5-year bond that pays $1,750 $25,000 × 7% interest annually, if the market rate of interest is 7%

Present Value of $1 at Compound Interest
$\begin{array}{|l|l|l|l|l|}\hline \text { Periods } & 5 \% & 6 \% & 7 \% & 10 \% \\\hline 1 & 0.95238 & 0.94340 & 0.93458 & 0.90909 \\\hline 2 & 0.90703 & 0.89000 & 0.87344 & 0.82645 \\\hline 3 & 0.86384 & 0.83962 & 0.81630 & 0.75132 \\\hline 4 & 0.82270 & 0.79209 & 0.76290 & 0.68301 \\\hline 5 & 0.78353 & 0.74726 & 0.71299 & 0.62092 \\\hline 6 & 0.74622 & 0.70496 & 0.66634 & 0.56447 \\\hline 7 & 0.71068 & 0.66506 & 0.62275 & 0.51316 \\\hline 8 & 0.67684 & 0.62741 & 0.58201 & 0.46651 \\\hline 9 & 0.64461 & 0.59190 & 0.54393 & 0.42410 \\\hline 10 & 0.61391 & 0.55840 & 0.50835 & 0.38554 \\\hline\end{array}$ Present Value of Annuity of $1 at Compound Interest

---

Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and the cost of goods sold based on the weighted average of all costs of goods available for sale.

Conversion Costs

Costs incurred in the process of converting raw materials into finished products, typically including labor and overhead expenses.

Weighted-Average Method

A cost accounting method that calculates inventory and the cost of goods sold based on the average cost of all similar items in inventory.

First-In-First-Out (FIFO)

An inventory valuation method where the first items produced or acquired are the first to be sold or used, reflecting the chronological flow of goods.