Question

In: Accounting

(Appendix A) Future Value, Present Value The following cases are each independent of the others. Required:...

(Appendix A) Future Value, Present Value

The following cases are each independent of the others.

Required:

1. Sam Lilliam places $5,000 in a savings account that pays 3 percent. Suppose Sam leaves the original deposit plus any interest in the account for two years. How much will Sam have in savings after two years? If required, round your answer to the nearest cent. (Note: the present value tables cannot be used to answer this question; you must instead use the formula that is presented in the appendix to the chapter.)
$

The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.

2. Suppose that the parents of a 12-year-old son want to have $80,000 in a fund six years from now to provide support for his college education.

How much must they invest now to have the desired amount if the investment can earn 4 percent?
$

How much must they invest now to have the desired amount if the investment can earn 6 percent?
$

How much must they invest now to have the desired amount if the investment can earn 8 percent?
$

3. Killian Manufacturing is asking $500,000 for automated equipment, which is expected to last six years and will generate equal annual net cash inflows (because of reductions in labor costs, material waste, and so on). What is the minimum cash inflow that must be realized each year to justify the acquisition? The cost of capital is 8 percent. Round your final answer to the nearest dollar.
$

Solutions

Expert Solution

The answer has been presented to the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.


Related Solutions

26. Solve each of the following independent cases using the present value tables: The following actual...
26. Solve each of the following independent cases using the present value tables: The following actual contracts signed by athletes: a. $28,000,000 contract, payable at $2,000,000 per year for 14 years. b. $31,500,000 contract, payable at $1,575,000 per year for 20 years. c. $24,000,000 contract, payable at $2,400,000 per year for 10 years. Determine the present value of each contract and indicate (with explanation) which contract you would prefer to have. Assume an 8% interest rate.
A. For each of the cases shown in the following table, calculate the present value of...
A. For each of the cases shown in the following table, calculate the present value of the cash flow, discounting the rate given and assuming that the cash flow is received at the end of the period noted. Case Single cash flow ($) Discount Rate (%) End of Period Present Value A 37,000 12 9 B 25,000 10 12 C 200 5 20 D 40,000 9 10 E 4,500 5 20 B. For each of the cases shown in the...
Determine the future value and the present value of the following single amounts: Future and Present...
Determine the future value and the present value of the following single amounts: Future and Present Values item Invested Amount Interest Rate Percentage No. of Periods 1 15,000.00 6 12 2 20,000.00 8 10 3 30,000.00 12 20 4 50,000.00 4 12
For each of the following independent cases, use FIFO costing to determine the information requested. Required:...
For each of the following independent cases, use FIFO costing to determine the information requested. Required: a. In the beginning inventory, 5,500 units were 40 percent complete with respect to materials. During the period, 37,000 units were transferred out. Ending inventory consisted of 7,700 units that were 60 percent complete with respect to materials. How many units were started and completed during the period? b. At the start of the period, 4,100 units were in the work-in-process inventory; 3,100 units...
For each of the following independent cases, use FIFO costing to determine the information requested. Required:...
For each of the following independent cases, use FIFO costing to determine the information requested. Required: a. In the beginning inventory, 4,500 units were 40 percent complete with respect to materials. During the period, 39,000 units were transferred out. Ending inventory consisted of 6,500 units that were 70 percent complete with respect to materials. How many units were started and completed during the period? b. At the start of the period, 3,700 units were in the work-in-process inventory; 2,700 units...
Analyze the following independent situations. Required: For each situation, state the likelihood of a future event...
Analyze the following independent situations. Required: For each situation, state the likelihood of a future event and state how the contingency will be reported. Company A estimates it will have to pay $85,000 in warranty repairs next year. Company B is being sued by a customer. Company B's attorneys feel that this is a frivolous lawsuit and there is very little chance that the customer will win. Company C co- signed a note payable for Company D. Company D is...
FOR EACH OF THE CASES SHOWN IN THE TABLE BELOW, CALCULATE THE FUTURE VALUE OF THE...
FOR EACH OF THE CASES SHOWN IN THE TABLE BELOW, CALCULATE THE FUTURE VALUE OF THE SINGLE CASH FLOW DEPOSITED TODAY THAT WILL BE AVAILABLE AT THE END OF THE DEPOSIT PERIOD IF THE INTEREST IS COMPOUNDED ANNUALLY, SEMI ANNUALLY AND QUARTERLY AT THE RATE SPECIFIED OVER THE GIVEN PERIOD. CASE CASH FLOW INTEREST RATE DEPOSIT PERIOD (YEARS) ORDINARY ANNUITY ANNUITY DUE A $750 8% 10 B $3,250 12% 8 C $9,500 16% 20 D $10,000 20% 4
For each example, calculate the present value, or net present value, of the future amount(s) to...
For each example, calculate the present value, or net present value, of the future amount(s) to support your answer and show your work using either factors (pp. 219 & 221 in the text), an Excel spreadsheet with the Excel PV or NPV functions or the equations, such as PV = FV / (1+Interest Rate)Time. Suppose you have a project where you will invest $20,000 today and receive one payment $26,200 exactly 5 years in the future. If your opportunity cost...
Exercise 5-10 (Static) Future and present value [LO5-3, 5-7, 5-8] Answer each of the following independent...
Exercise 5-10 (Static) Future and present value [LO5-3, 5-7, 5-8] Answer each of the following independent questions. Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuity of $13,000 beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of...
Find the present value of $350 due in the future under each of the following conditions....
Find the present value of $350 due in the future under each of the following conditions. Do not round intermediate calculations. Round your answers to the nearest cent. 6% nominal rate, semiannual compounding, discounted back 5 years. $    6% nominal rate, quarterly compounding, discounted back 5 years. $    6% nominal rate, monthly compounding, discounted back 1 year. $   
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT