1. How much must be deposited at the beginning of each year to accumulate to $10,000...

1. How much must be deposited at the beginning of each year to accumulate to $10,000 in four years if interest is at 9%?

a. $1,671 b. $2,006 c. $2,358 d. $2,570

2. On January 1, 2021, Amy Company sold goods to Michelle Corporation. Michelle signed an installment note requiring payment of $15,000 annually for six years. The first payment was made on January 1, 2021. The prevailing rate of interest for this type of note at date of issuance was 8%. Amy should record sales revenue in January 2021 of:

a. $69,343 b. $74,891 c. $90,000 d. None of the above are correct

3. Jardell Company purchased a five-year certificate of deposit for its building fund in the amount of $220,000. How much should the certificate of deposit be worth at the end of five years if interest is compounded at an annual rate of 9%?

a. $142,985 b. $319,000 c. $338,496 d. $855,723

4. Boss Babes Construction is considering the purchase of a machine at a cost of $110,000. The machine is expected to generate cash flows of $20,000 per year for 10 years and can be sold at the end of 10 years for $10,000. Interest is at 10%. Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations. Required: Determine whether Boss Babes should purchase the machine.

5. Stone Corporation has a defined benefit pension plan. One of its employees has vested benefits under the plan, which will pay her $30,000 annually for life starting with the first $30,000 payment on the day she retires at the age of 65. The employee has just reached the age of 45. Stone consulted standard mortality tables to come up with a life expectancy of 80 for this employee. The implicit interest rate under the plan is 9%. Required: To fulfill this pension obligation, what amount does Stone Company need to have at the time of the employee’s retirement (what is the present value of the retirement benefit at the time the employee retires)?

a. $600,000 b. $450,000 c. $263,585 d. $241,821

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Present/future value computations 1. How much must be deposited on January 1, 2013 to accumulate a...

Present/future value computations 1. How much must be deposited on January 1, 2013 to accumulate a balance of $50,000 on December 31, 2017? At interest rate of 3.5% At interest rate of 6% 2. 50,000 is deposited at interest compounded annually what amount will be on hand in seven years at 4%? at 8% 2A. What if 50,000 is deposited at interest compounded semi-annually what amount will be on hand in seven years At 4%? At 8% 3. How much...

If Php 10,000 is deposited each year for 9 years, how much annuity can a person...

If Php 10,000 is deposited each year for 9 years, how much annuity can a person get annually from the bank every year for 8 years starting 1 year after the 9th deposit is made? Cost of money is 14%

What is the size of the payments that must be deposited at the beginning of each...

What is the size of the payments that must be deposited at the beginning of each 6-month period in an account that pays 5.2%, compounded semiannually, so that the account will have a future value of $170,000 at the end of 18 years? (Round your answer to the nearest cent.)

How much would need to be contributed each year for 30 years to accumulate $1,300,000 assuming...

How much would need to be contributed each year for 30 years to accumulate $1,300,000 assuming a return on the investments of 8 percent? Round to the nearest dollar if needed.

How much must be deposited in an account to have annual withdrawals of $ 2607 forever?...

How much must be deposited in an account to have annual withdrawals of $ 2607 forever? Interest is compounded quarterly and the interest rate is 9% for the first 13 years and 15 % thereafter. The answer is close to

$2,000 are deposited into a fund at the beginning of each year for 20 years. Starting...

$2,000 are deposited into a fund at the beginning of each year for 20 years. Starting from the beginning of the 26th year, the balance can support annual payment D lasting forever. Find D if the nominal interest rate compounded continuously is 8%.

- If you wish to accumulate $240,000 in 13 years, how much must you deposit today...

- If you wish to accumulate $240,000 in 13 years, how much must you deposit today in an account that pays an annual interest rate of 10%? Round to the nearest $0.01. - What will $117,000 grow to be in 18 years if it is invested in an account with an annual interest rate of 7.75%? Round to the nearest $0.01.

Question