Which One of the following is true about intraperiod tax allocation?
1 answer:
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Answer:
N = 5 years
Explanation:
At first we have to calculate the number of periods to determine at which part of the table we should look at.
Given,
PV = $20,000
FV = $32,000
Interest rate, i = 0.10 (10%)
Number of periods, n = ?
We know, Future value, FV = PV ×
or, $32,000 = $20,000 ×
or, 1.6 =
As the factor is 1.6, we will look at the following image which is the FV factor table to find the number of periods.
We can find it in a different way too.
log 1.6 = n log 1.10
or, n =
or, n = 4.93 years
Therefore, n = 5 years
