{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FIN200 Week 8 DQ 2 - period 7 by the future amount to be...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Jean will receive $8500 per year for the next 15 years from her trust. if a 7% interest  rate is applied, what is the current value of the future payments? Describe how you  solved this problem, including which table(for example, present value and future value)  was used and why". need 150 to 300 word post Current Value of Future Payments = Payment Per period *(Present value Ordinary  factor of $1 for 15 period, 7%) (Getting Present Value Ordinary annuity factor from Present value of $1 ordinary  annuity  table) Current Value = 8500*9.10791=$77417.24 So the current value of payment to be  received by Jean over the next 15 year is  $77417.24. We solved the problem by multiplying Present value ordinary annuity factor ($1 for 15 
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: period, 7%) by the future amount to be received in each year. The table used is Present Value ordinary annuity of $1 table because this table gives us the Present value of the $1 to be received each year for a combination period and interest rate which is called present value of ordinary annuity factor. So when we multiply the relevant present value ordinary annuity factor with the payment to be received in each period we get the present value of the future amounts to be received. (For PV table refer http://www.principlesofaccounting.com/ART/fv.pv.tables/pvofordinaryannuity.htm ) Note: Its assumed the payment would be received at the end of each year that is ordinary annuity....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern