Chapter 13A - Solution Manual

Chapter 13A - Solution Manual - Chapter 13A The Concept of...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 13A The Concept of Present Value Appendix 13A The Concept of Present Value Exercise 13A-1  (10 minutes) a. From Exhibit 13B-1, the present value factor for 8% for three  periods is 0.794. Therefore, the present value of the investment in  the garage is $317,600 (=$400,000 × 0.794). If $317,600 is  invested now at 8%, in three years it will have grown to $400,000. b. From Exhibit 13B-1, the present value factor for 12% for three  periods is 0.712. Therefore, the present value of the investment in  the garage is $284,800 (=$400,000 × 0.712). If $284,800 is  invested now at 12%, in three years it will have grown to $400,000. Exercise 13A-2  (10 minutes) You should prefer option (a) because its present value is the largest: Option a: $50,000 × 1.000 = $50,000. Option b: $75,000 × 0.507 = $38,025. (From Exhibit 13B-1) Option c: $12,000 × 4.111 = $49,332. (From Exhibit 13B-2) Exercise 13A-3  (10 minutes) a. From Exhibit 13B-1, the factor for 6% for 3 periods is 0.840. 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Chapter 13A - Solution Manual - Chapter 13A The Concept of...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online