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2 years ago

What criteria do accountants use to decide whether to use present or future values in accounting statements?

Business

1 answer:

Airida [17]2 years ago

5 0

Answer:

Present value is nothing but how much future sum of money worth today. It is one of the important concepts in finance and it is a basis for stock pricing, bond pricing, financial modeling, banking, and insurance, etc. Present value provides us with an estimated amount to be spent today to have an investment worth a certain amount of money at a specific point in the future. Present value is also called a discounted value. It is an indicator for investors that whatever money he will receive today can earn a return in the future. With the help of present value, method investors calculate the present value of a firm’s expected cash flow to decide if a stock is worth to invest today or not.

The formula for calculating PV is shown below

PV = CF/ (1+r)n

Here ‘CF’ is future cash flow, ‘r’ is a discounted rate of return and ‘n’ is the number of periods or year.

Example

Let’s say that you have been promised by someone that he will give you 10,000.00 Rs 5 year from today and interest rate is 8% so no we want to know what the present value of 10,000.00 Rs which you will receive in future so,

PV = 10,000/ (1+0.08)5

PV = 6805.83 (To the nearest Decimal)

So present-day value of Rs 10,000.00 is Rs 6805.83

Explanation:

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Question 3 of 20

Nat2105 [25]

I think that the answer would be D

5 0

3 years ago

a bacteria population starts with 200 bacteriaa and grows at a rate of r(t) = (450.268)e 1.12567t bacteria per hour. How many ba

Virty [35]

Answer:

11,513

Explanation:

Data provided in the question:

Initial bacteria = 200

Growth rate r(t) = $(450.268)e^{1.12567t}$

Now,

Total growth after 3 hours = $\int\limits^3_0 {(450.268)e^{1.12567t}} \, dt$

Total growth after 3 hours = $450.268\int\limits^3_0 {e^{1.12567t}} \, dt$

Total growth after 3 hours = $450.268[\frac{e^{1.12567t}}{1.12567}]^3_0$

[ ∵ $\int{d(e^x)}{dt}=\frac{e^x}{\frac{dx}{dt}}$ ]

Thus,

Total growth after 3 hours = 400 × $[{e^{1.12567t}]^3_0$

Total growth after 3 hours = 400 × $[{e^{1.12567(3)}-e^{1.12567(0)}]$

Total growth after 3 hours ≈ 11313

Hence,

Total bacteria after 3 hours = Initial bacteria + Total growth after 3 hours

= 200 + 11313

= 11,513

4 0

3 years ago

The Nautical Corporation manufactures custom-made wood wall units. The following data pertains to Job X4A: Direct materials plac

Leokris [45]

Answer:

Total Cost of Job X4A: $

Direct material cost ($9,000 x 500 units) 4,500,000

Direct labour cost (300 hrs x $15 x 500 units ) 2,250,000

Overhead applied (100 hrs x $22.50 x 500 units) 1,125,000

Total cost 7,875,000

Explanation:

The total cost of Job X4A is the aggregate of direct material cost, direct labour cost and overhead applied. Overhead is absorbed on the basis of machine hours. Thus, we will multiply the overhead rate by machine hours and number of units produced.

7 0

4 years ago

When the Central Bank lowers the bank rate, borrowing from the central bank becomes cheaper and commercial banks borrow more fro

tresset_1 [31]

Answer:

= All

Explanation:

= U.S. exports increase, shifting U.S. aggregate demand to the right

7 0

3 years ago

The Internet helps consumers make well-informed decisions because of

Serga [27]

Answer:

B. It provides the information that is crucial for making good choices

Explanation:

The internet is mainly a worldwide network where information flows between all the participants (internet users). For this reason, the Internet has a great flow of information about consumer goods that individuals use to make well-informed purchase decisions.

8 0

3 years ago