Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

Exercise 34

Present value calculations-effects of compounding frequency, discount rates, and time periods Using a present value table, your calculator, or a computer program present value function, verify that the present value of $100,000 to be received in five years at an interest rate of 16%, compounded annually, is $47,610. Calculate the present value of $100,000 for each of the following items (parts a - f ) using these facts, except:
a. Interest is compounded semiannually.
b. Interest is compounded quarterly.
c. A discount rate of 12% is used.
d. A discount rate of 20% is used.
e. The cash will be received in three years.
f. The cash will be received in seven years.