Sponge Bob Will Receive a Payment of $5,000 Per Year

question 91

Essay

Sponge Bob will receive a payment of $5,000 per year for 7 years beginning three years from today. At a discount rate of 9 percent, what is the present value of this deferred annuity?

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Definitions:

Permanent/Temporary

Describes accounts in financial reporting; permanent accounts show ongoing financial status, while temporary accounts track revenues, expenses, and dividends over a specific period.

Normal Balance

The side (debit or credit) of an account that increases its balance, reflecting the account's role in the accounting equation.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, detailing assets, liabilities, revenue, and expenses over a specific period.

Permanent/Temporary

Used to classify accounts, with permanent accounts being those that carry their balances over into the next fiscal year, and temporary accounts being closed at the end of the fiscal year.