In: Accounting
1) ABC Company borrows $100,000 for 3 years with a stated annual
rate of 10%. What is the amount of interest paid computed as
compound interest
2) ABC Company invests $1,000 for 10
years at 8% with interest compounded annually. ABC will receive the
entire amount (principal plus interest) at the end of the 10-year
period. What is the future value of this single sum, using the
formula approach?
3) ABC Company is considering investing in a piece of land it
believes it can sell in 10 years for $200,000. The relevant
interest rate is 8% with annual compounding. What should ABC
Company pay for this land today (specifically, what is the present
value of this investment)?
4) ABC Company will receive $1,000 semiannually for the next 10
years, with the first amount received at the end of the first
semiannual period. The interest rate is 8%. Using the table
approach, what is this stream of future cash flows worth today (to
the nearest dollar)?
5) ABC Company borrows $100,000 at an interest rate of 10% today
and will repay this amount by making 10 semiannual payments.
Payments begin in six months. Using the table approach, what is the
amount of the payments that ABC Company will need to make (to the
nearest dollar)?
for formulas and calculations, refer to the image below -
In case you have any query, kindly ask in comments.