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Keith_Richards [23]
3 years ago
9

You are scheduled to receive annual payments of $3,600 for each of the next 12 years. The discount rate is 8 percent. What is th

edifference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?A.$2,170.39B.$2,511.07C.$2,021.18D.$2,027.94E.$2,304.96
Business
1 answer:
KonstantinChe [14]3 years ago
7 0

Answer:

A. $2,170.39

Explanation:

First, we understand that what we are dealing with is Ordinary annuity which represents payments received at the end of each year

As such, The Present value of Ordinary annuity is calculated using the following formula

= Annuity amount x (1-(1+r)∧-n ) /r

Plugging this formula into the schedule given in the question ew have teh following

First, the present value of the payments received at the end of each year

= $3,600 x (1- (1.08∧-12) / 0.10

= $27,129.88

Secondly, the present valueof the payments received at the beginning of each year

= = $3,600 x (1- (1.08∧-11) / 0.10

= $25,700.27 + $3,600 (the amont recieved today)

Total PV = $29,300.27

Finally, find the difference between the PV of cash flow received at the beginning and PV of Cash flow received at the end=

= $29,300.27-  $27,129.88

= $2,170.39

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Answer:

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Explanation:

Given that,

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konstantin123 [22]

Answer:

JOURNAL ENTRIES related Accounts Receivables

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12 June Debit Accounts receivable $37,400 Credit Service Revenue $37,400

17 Sep Debit Bank $22,000 Credit Accounts receivables $22,000

31 Dec Debit provision for doubtful debts adjustment (expense) $6,930 Credit Provision for bad debts $6930

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4 Mar Debit Accounts receivable $ 52400, Credit Service revenue $52,400

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an increase in provision or allowance in doubtful debts is an expense

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closing (15800*0.45)                     $7110

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Answer:

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