Computation of Present Value) Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods.
$30,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%.
To compute the present values of the periodic amounts, we need to use the appropriate interest table and the formula for present value.
1. First, we need to determine the present value factor from the interest table. The table provides the factor for each period and interest rate. In this case, we need the factor at 12% for each of the four periods (7, 8, 9, and 10).
2. The formula to calculate the present value is:
Present Value = Future Value / Present Value Factor
3. Let's find the present value factor for each of the specified periods at 12% in the interest table:
- Period 7: The present value factor at 12% for 7 periods is 0.502
- Period 8: The present value factor at 12% for 8 periods is 0.452
- Period 9: The present value factor at 12% for 9 periods is 0.404
- Period 10: The present value factor at 12% for 10 periods is 0.360
4. Now, we can calculate the present value of each periodic amount:
- Present Value at the end of the seventh period:
Present Value = $30,000 * 0.502 = $15,060
- Present Value at the end of the eighth period:
Present Value = $30,000 * 0.452 = $13,560
- Present Value at the end of the ninth period:
Present Value = $30,000 * 0.404 = $12,120
- Present Value at the end of the tenth period:
Present Value = $30,000 * 0.360 = $10,800
Therefore, the present values of the specified periodic amounts at the given periods and interest rate are $15,060, $13,560, $12,120, and $10,800, respectively.