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Juli2301 [7.4K]
2 years ago
10

An investment offers $2,374 per year for 13 years, with the first payment occurring 1 year from now. If the required return is 8

percent, what is the value of the investment
Business
1 answer:
Rom4ik [11]2 years ago
6 0

Answer:

PV=  $18,763.56

Explanation:

Giving the following information:

Annual payment (A)= $2,374

Number of payments= 13

Discount rate (i)= 8%

<u>To calculate the present value, we need to use the following formula:</u>

<u></u>

PV= A*{(1/i) - 1/[i*(1 + i)^n]}

PV= 2,374*{(1/0.08) - 1 / [(0.08*(1.08^13)}}

PV=  $18,763.56

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In 2018, Bratten Fitness Company made the following cash purchases:
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Date           Particular                                         DR                          CR

a.               Patent                                               $214,500

                  Cash                                                                            214,500

          <em>Being total payment for the exclusive right </em>

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b.              Brand name                                        260,000

               Exercise Equipment                             403,000

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<em>Being the payment for the brand name of Silver Gym </em>

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<em>c.            </em>Copyright                                                  22,000

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