In: Accounting
(1) Wildhorse Inc. has $574,100 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,173 at the end of each year for 12 years, and the other is to receive a single lump-sum payment of $1,801,773 at the end of the 12 years. Which alternative should Wildhorse select? Assume the interest rate is constant over the entire investment.
ALTERNATE ONE OR ALTERNATE TWO
(2) Wildhorse Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $856,200. The purchase agreement specifies an immediate down payment of $203,200 and semiannual payments of $84,567 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
Interest rate |
% semiannually |
||
(3) Wildhorse Inc. loans money to John Kruk Corporation in the
amount of $776,800. Wildhorse accepts an 8% note due in 7 years
with interest payable semiannually. After 2 years (and receipt of
interest for 2 years), Wildhorse needs money and therefore sells
the note to Chicago National Bank, which demands interest on the
note of 10% compounded semiannually. What is the amount Wildhorse
will receive on the sale of the note? (Round factor
values to 5 decimal places, e.g. 1.25124 and final answer to 0
decimal places, e.g. 458,581.)
Amount received on sale of note |
$ |
(4) Wildhorse Inc. wishes to accumulate $1,297,600 by December
31, 2027, to retire bonds outstanding. The company deposits
$203,200 on December 31, 2017, which will earn interest at 10%
compounded quarterly, to help in the retirement of this debt. In
addition, the company wants to know how much should be deposited at
the end of each quarter for 10 years to ensure that $1,297,600 is
available at the end of 2027. (The quarterly deposits will also
earn at a rate of 10%, compounded quarterly.) (Round
factor values to 5 decimal places, e.g. 1.25124 and final answer to
0 decimal places, e.g. 458,581.)
Annuity of value of quarterly deposits |
$ |