Question 1 of 5 Share Facebook Twitter LinkedIn WhatsApp Email Copy Link What is the discounted value of the account at the beginning of Year 1? A. $75,000 B. $46,507 C. $37,500 D. $67,500 Submit Answer
Question 2 of 5 Share Facebook Twitter LinkedIn WhatsApp Email Copy Link A business wishes to discount a future value dollar amount to present value. Which type of interest is used for this calculation? A. Compound B. Inflationary C. Paid D. Simple Submit Answer
Question 3 of 5 Share Facebook Twitter LinkedIn WhatsApp Email Copy Link A company factored $100,000 of accounts receivables. The factor discounted the receivables by the interest for the one year it planned to take to collect the receivables. Using an annual interest rate of 9%, the present value of the receivables is $100,000 * 0.917 = $91,700. How much cash should the company expect to receive? A. $91,700 B. $108,300 C. $100,000 D. $91,000 Submit Answer
Question 4 of 5 Share Facebook Twitter LinkedIn WhatsApp Email Copy Link A company plans on purchasing a new piece of equipment in six years. The equipment is expected to cost $200,000. In planning for this purchase, the company will deposit an amount of money into an investment account earning 8% compounded annually. Using an 8% interest rate, the implied annual interest is $200,000 * 0.08 = $16,000. The following information is given: Assuming an annual interest rate of 8% for eight years is appropriate, the present value of the deposit is $200,000 * 0.62741 = $125,482. Assuming an annual interest rate of 8% for six years is appropriate, the present value of the deposit is $200,000 * 0.63017 = $126,034. Assuming an annual interest rate of 8% for eight years is appropriate, the present value of the deposit is $200,000 * 0.54027 = $108,054. How much does this company need to deposit today? A. $125,482 B. $126,034 C. $108,054 D. $104,000 Submit Answer
Question 5 of 5 Share Facebook Twitter LinkedIn WhatsApp Email Copy Link A company will receive payments of $8,000 per year for the next five years under a subscription contract. The first payment will be made at the beginning of the contract. Assuming an annual interest rate of 4% is appropriate, the present value of an ordinary annuity is 4.4518 * $8,000 = $35,615 and the present value of an annuity due is 4.6299 * $8,000 = $37,039. Which amount must the company record for this sale in accordance with generally accepted accounting principles (GAAP) if collection is reasonably assured? A. $0 B. $37,039 C. $35,615 D. $40,000 Submit Answer