Determine the present value of $150,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows:
a. By successive computations, using the present value table in Exhibit 4 shown below. Round to the nearest dollar.
- First year $
- Second Year $
- Third Year $
- Fourth Year $
- Total present value $
b. By using the present value table in Exhibit 5 shown below. Round to the nearest whole dollar.
$_______________
c. Why is the present value of the four $150,000 cash receipts less than the $600,000 to be received in the future?