Q5Q

Expert-verifiedFound in: Page 301

Book edition
16th

Author(s)
Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Pages
1552 pages

ISBN
9781118743201

**Question:The following are a number of values taken from compound interest tables involving the same number of periods and the same rate of interest. Indicate what each of these four values represents. (a) 6.71008. (c) .46319. (b) 2.15892. (d) 14.48656.**

6.71008 shows the present value, 0.46319 shows the future value, 2.15892 shows the present value, and 14.48656 shows the future value of the ordinary annuity.

Ordinary annuityrefers to a series of frequent or regular payments made at the end of each period.Periods can be monthly, quarterly, half-yearly, and yearly.

The four values mentioned in the question indicates the following:

6.71008 shows the present value of an ordinary annuity at an 8% interest rate for 10 periods (Table 6-4)

0.46319 represents the future value of 1 at 8% for 10 periods.

2.15892 indicates the present value of 1 at 8% for 10 periods

14.48656 represents the future value of the ordinary annuity at 8% for 10 periods

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