Exercise 10-2A (Algo) Determining the present value of a lump-sum future cash receipt LO 10-1Larry Mattingly turned 20 years old today His grandfather had established a trust fund that will pay him $85.000 on his next birthdayHowever Larry needs money today to start his college education, and his father is willing to help. M. Mattingly has agreed to giveLarry the present value of the $85.000 future cash inflow, assuming a 8 percent rate of return. EVofS1 and EVASD (Useappropriate fector(s) from the tables previded.)Required. Determine the amount of cash that Lary Mattingly's father should give him. (Round your final answer to the nearest whole dollervalue.)

Present value or PV is the discounted worth of a future cash flow taking into consideration the time…

Answered: Larry Mattingly turned 20 years old…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter4: Gross Income

Section: Chapter Questions

Problem 2RP

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CH9HW i Help Save & Exit Submit a. A friend of yours, Grace, wants to purchase a house in five years. To save for the house, Grace decides to deposit $140,000 in a savings account on January 1 of this year. The savings account will earn 8 percent annually. Any interest earned will be added to the fund at year-end (rather than withdrawn). b. At the end of each year, a different friend, Claire, plans to deposit $10,400 in a savings account. The account will earn 11 percent annual interest, which will be added to the fund balance at year-end. Claire will make her first deposit at the end of this year. (FV of $1, PV of $1, FVA of
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Exercise 10-3A (Algo) Determining the present value of a lump-sum future cash receipt LO 10-1 Gail Trevino expects to receive a $630,000 cash benefit when she retires seven years from today. Ms. Trevino’s employer has offered an early retirement incentive by agreeing to pay her $368,000 today if she agrees to retire immediately. Ms. Trevino desires to earn a rate of return of 10 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Calculate the present value of the $630,000 future cash benefit. Assuming that the retirement benefit is the only consideration in making the retirement decision, should Ms. Trevino accept her employer’s offer? (Round your final answer to the nearest whole dollar value.)
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