Question

Help!!! My issue is that the attached appendix does not have a 19% columun on it. How do I calculate the 19% rate to complete the problem. I have attached the appendix that was given which is the second table on the picture:

Answer 1

Conversion factor can be computed easily manually. To compute PVIF and PVIFA we need periodic rate and number of period. Periodic rate of interest is 0.19 and Number of period is not mentioned.

For first table (PVIF):

Period 1:

1/ (1+r) ⁿ

=1/ (1+0.19)¹ = 1/1.19 = 0.840336134 or 0.840

Period 2:

1/ (1+r) ⁿ

=1/ (1+0.19)² = 1/ (1.19)² = 1/1.4161 = 0.706164819 or 0.706

Period 3:

1/ (1+r) ⁿ

=1/ (1+0.19)³ = 1/ (1.19)³ = 1/ 1.685159 = 0.593415814 or 0.593

Period 4:

1/ (1+r) ⁿ

=1/ (1+0.19)⁴ = 1/ (1.19)⁴ = 1/ 2.00533921 = 0.498668751 or 0.499

And so on…

For second table (PVIFA):

Period 1:

[1- 1/ (1+r) ⁿ]/r

= [1-1/ (1+0.19)¹]/0.19 = [1-1/ (1.19)]/0.19

= [1-0.840336134]/0.19 = 0.159663866/0.19 = 0.840336134 or 0.840

Period 2:

[1- 1/ (1+r) ⁿ]/r

= [1-1/ (1+0.19)²]/0.19 = [1-1/ (1.19)²]/0.19 = [1-1/1.4161]/0.19

= [1-0.706164819]/0.19 = 0.293835181/0.19 = 1.546500953 or 1.547

Period 3:

[1- 1/ (1+r) ⁿ]/r

= [1-1/ (1+0.19)³]/0.19 = [1-1/ (1.19)³]/0.19 = [1-1/1.685159]/0.19

= [1-0.593415814]/0.19 = 0.406584186/0.19 = 2.139916767or 2.140

Period 4:

[1- 1/ (1+r) ⁿ]/r

= [1-1/ (1+0.19)⁴]/0.19 = [1-1/ (1.19)⁴]/0.19 = [1-1/2.00533921]/0.19

= [1-0.498668751]/0.19 = 0.501331249/0.19 = 2.638585519 or 2.639

And so on ….