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mrs_skeptik [129]
3 years ago
15

Mustard's Inc. sold the rights to use one of its patented processes that will result in cash receipts of $3,600 at the end of ea

ch of the next three years and a lump sum receipt of $5,100 at the end of the fourth year. The total present value of these payments if interest is at 9% is:
Business
1 answer:
Korolek [52]3 years ago
8 0

Answer:

Total present value of the payments=$11,263.96

Explanation:

<em>Step 1: Determine the total future value of all the payments</em>

For the next 3 year;

Total future value=3,600×3=$10,800

For the fourth year;

Total future value=$5,100

At the end of 4 years, Mustard's Inc will have a future value of;

5,100+10,800=$15,900

<em>Step 2: Determine the present value of all the payments</em>

Using the formula;

F.V=P.V(1+r)^n

where;

F.V=future value

P.V=present value

r=interest rate

n=number of years

In our case;

F.V=$15,900

P.V=unknown

r=9%=9/100=0.09

n=4 years

replacing;

15,900=P.V(1+0.09)^4

15,900=1.4116 P.V

P.V=15,900/1.4116

P.V=11,263.96

Total present value of the payments=$11,263.96

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Answer:

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Elden [556K]

Answer:

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Explanation:

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Engage in nepotism.

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7 0
3 years ago
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Answer:

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4 0
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