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Yakvenalex [24]
4 years ago
13

Cullumber, Inc., management expects the company to earn cash flows of $12,900, $16,300, $18,600, and $19,800 over the next four

years. If the company uses an 10 percent discount rate, what is the future value of these cash flows at the end of year 4? (Round answer to 2 decimal places, e.g. 15.25. Do not round factor values.)
Business
1 answer:
DaniilM [7]4 years ago
7 0

Answer:

$77,152.90

Explanation:

The computation of the future value is shown below:

Given that

Yearly cash flows

$12,900

$16,300

$18,600

$19,800

Discount rate = 10%

Time period = 4 years

So, the future value of these cash flows is

= $12,900 × (1.1)^3 + $16,300 × (1.1)^2 + $18,600 × (1.1)^1 + $19,800

After solving this the amount came is

= $77,152.90

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Answer:

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Explanation:

At the end of the year, due to the matching principle, expenses of the same period need to be matched with that period and 'expensed' in the same year.

In the scenario above there has been 4 months out of 9 used in the current year, hence as at December 31st. 4 months interest will be included in the current year and 5 months interest will be attributable to the following future.

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In consonance with the <em>accrual basis of accounting</em>, the amount of accrued interest that will be recorded with adjusting entries will be:

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