Present Value of 1 Future Value of 1

question 10

Short Answer

Present Value of 1 Future Value of 1 Present Value of an Annuity of 1 Future Value of an Annuity of 1 A company needs to have $200,000 in 4 years, and will create a fund to insure that amount will be available. If it can earn a 7% return compounded annually, how much must the company invest in the fund today to equal the $200,000 at the end of 4 years?

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Definitions:

Safety Stock

An additional quantity of an item held in inventory to reduce the risk of stockouts due to uncertainties in demand or supply.

Budgeted Production

An estimate of the quantity of products or services a business plans to produce over a certain period, used for planning and control purposes.

Sales Budget

An estimate of the sales revenue and sales volume expected for a future period, forming a basis for other business planning.

Accumulated Depreciation

The total depreciation that has been recorded for an asset since its acquisition, reflecting its reduction in value over time.