In: Accounting
The following situations should be considered independently. (FV
of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
(Use appropriate factor(s) from the tables
provided.)
1. John Jamison wants to accumulate $62,154 for a
down payment on a small business. He will invest $34,000 today in a
bank account paying 9% interest compounded annually. Approximately
how long will it take John to reach his goal?
2. The Jasmine Tea Company purchased merchandise
from a supplier for $31,453. Payment was a noninterest-bearing note
requiring Jasmine to make six annual payments of $6,000 beginning
one year from the date of purchase. What is the interest rate
implicit in this agreement?
3. Sam Robinson borrowed $13,000 from a friend and
promised to pay the loan in 10 equal annual installments beginning
one year from the date of the loan. Sam’s friend would like to be
reimbursed for the time value of money at a 10% annual rate. What
is the annual payment Sam must make to pay back his friend?