Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 11, Problem 12EA
Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friend’s trust fund payments. For further instructions on future value in Excel, see Appendix C.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friend’s trust fund payments.
(Click here to see present value and future value tables)
Amount ofYearly Receipt
Rate
Time
Current Value
$6,400
10%
6 years
$fill in the blank 1
$12,000
12%
10 years
$fill in the blank 2
$17,500
5%
14 years
$fill in the blank 3
$22,000
15%
15 years
$fill in the blank 4
Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friend’s trust fund payments.
Present value and future value tables: https://openstax.org/books/principles-managerial-accounting/pages/time-value-of-money
you want to establish a perpetuity that pays $6500 per year. Your banker will establish such an account if you deposit $97000 in her institution. calculate the rate that she is paying on the deposit
Chapter 11 Solutions
Principles of Accounting Volume 2
Ch. 11 - Capital investment decisions often involve all of...Ch. 11 - Preference decisions compare potential projects...Ch. 11 - The third step for making a capital investment...Ch. 11 - You are explaining time value of money factors to...Ch. 11 - If you are saving the same amount each month in...Ch. 11 - You want to invest $8,000 at an annual Interest...Ch. 11 - Using the information provided, what transaction...Ch. 11 - Grummet Company is acquiring a new wood lathe with...Ch. 11 - The process that determines the present value of a...Ch. 11 - The process of reinvesting interest earned to...
Ch. 11 - The NPV method assumes that cash inflows...Ch. 11 - Which of the following does nor assign a value to...Ch. 11 - Which of the following discounts future cash flows...Ch. 11 - This calculation determines profitability or...Ch. 11 - The IRR method assumes that cash flows are...Ch. 11 - When using the NPV method for a particular...Ch. 11 - What are the steps involved in the process for...Ch. 11 - Why does a company evaluate both the money...Ch. 11 - What is the next thing a company needs to do after...Ch. 11 - What is the screening decision?Ch. 11 - Your supervisor is on the companys capital...Ch. 11 - Ekon owns a small tow-truck business that responds...Ch. 11 - What is the payback method used to determine?Ch. 11 - What are one advantage and one disadvantage of the...Ch. 11 - What are one advantage and one disadvantage of the...Ch. 11 - What is the equation to calculate the payback...Ch. 11 - What is the equation to calculate the accounting...Ch. 11 - What is future value and what is one example where...Ch. 11 - Why do businesses consider time value of money...Ch. 11 - What determines the anticipated interest rate...Ch. 11 - To calculate present value of a lump sum, which...Ch. 11 - What is the definition of present value?Ch. 11 - What is the difference between the discount rate...Ch. 11 - Briefly explain how NPV is computed and...Ch. 11 - What is the basic benefit of using IRR?Ch. 11 - How is the IRR determined if there are uneven cash...Ch. 11 - A fellow student studying managerial accounting...Ch. 11 - What are the strengths and weaknesses of NPV?Ch. 11 - What are the strengths and weaknesses of IRR?Ch. 11 - How does the size of the initial investment affect...Ch. 11 - Bobs Auto Repair has determined that it needs new...Ch. 11 - In practice, external factors can impact a capital...Ch. 11 - If a copy center is considering the purchase of a...Ch. 11 - Assume a company is going to make an investment of...Ch. 11 - If a garden center is considering the purchase of...Ch. 11 - The management of Kawneer North America is...Ch. 11 - A mini-mart needs a new freezer and the initial...Ch. 11 - You put $250 in the bank for S years at 12%. A. If...Ch. 11 - If you invest $12,000 today, how much will you...Ch. 11 - You have been depositing money into an account...Ch. 11 - How much would you invest today in order to...Ch. 11 - Your friend has a trust fund that will pay her the...Ch. 11 - Jullo Company is considering the purchase of a new...Ch. 11 - How much must be invested now to receive $30,000...Ch. 11 - Project A costs $5,000 and will generate annual...Ch. 11 - Project B cost $5,000 and will generate after-tax...Ch. 11 - Gardner Denver Company is considering the purchase...Ch. 11 - Consolidated Aluminum is considering the purchase...Ch. 11 - Redbird Company is considering a project with an...Ch. 11 - Towson Industries is considering an investment of...Ch. 11 - Cinemar Productions bought a piece of equipment...Ch. 11 - Margos Memories, a company that specializes in...Ch. 11 - Boxer Production, Inc., is in the process of...Ch. 11 - A restaurant is considering the purchase of new...Ch. 11 - Assume a company is going to make an investment in...Ch. 11 - A grocery store is considering the purchase of a...Ch. 11 - The management of Ryland International Is...Ch. 11 - An auto repair company needs a new machine that...Ch. 11 - You put $600 in the bank for 3 years at 15%. A. If...Ch. 11 - If you invest $15,000 today, how much will you...Ch. 11 - You have been depositing money into an account...Ch. 11 - How much would you invest today in order to...Ch. 11 - Your friend has a trust fund that will pay her the...Ch. 11 - Conestoga Plumbing plans to invest in a new pump...Ch. 11 - How much must be invested now to receive $50,000...Ch. 11 - Project X costs $10,000 and will generate annual...Ch. 11 - Project Y cost $8,000 and will generate net cash...Ch. 11 - Caduceus Company is considering the purchase of a...Ch. 11 - Garnette Corp is considering the purchase of a new...Ch. 11 - Wallace Company is considering two projects. Their...Ch. 11 - Taos Productions bought a piece of equipment for...Ch. 11 - Your company is planning to purchase a new log...Ch. 11 - Jasmine Manufacturing is considering a project...Ch. 11 - Use the tables in Appendix B to answer the...Ch. 11 - Ralston Consulting. Inc., has a $25,000 overdue...Ch. 11 - Falkland, Inc., is considering the purchase of a...Ch. 11 - There are two projects under consideration by the...Ch. 11 - There are two projects under consideration by the...Ch. 11 - Pompeiis Pizza has a delivery car that it uses for...Ch. 11 - Pitt Company is considering two alternative...Ch. 11 - The Ham and Egg Restaurant is considering an...Ch. 11 - Gallant Sports s considering the purchase of a new...Ch. 11 - A bookstore is planning to purchase an automated...Ch. 11 - Markoff Products is considering two competing...Ch. 11 - Use the tables in Appendix B to answer the...Ch. 11 - Chang Consulting. Inc., has a $15,000 overdue debt...Ch. 11 - Mason, Inc., is considering the purchase of a...Ch. 11 - There are two projects under consideration by the...Ch. 11 - Use the information from the previous exercise to...Ch. 11 - D**M Pizza has a delivery car that is uses for...Ch. 11 - Joliet Company is considering two alternative...Ch. 11 - Bouvier Restaurant is considering an investment in...Ch. 11 - What is the benefit(s) of the accountants...Ch. 11 - Austins cell phone manufacturer wants to upgrade...Ch. 11 - Would you rather have $7,500 today or at the end...Ch. 11 - Midas Corp. evaluated a potential investment and...Ch. 11 - Giorgio Co. is looking at an investment project...Ch. 11 - Dinaro Inc. is looking at an investment project...Ch. 11 - You begin a new job at Cabrera Medical Supplies....Ch. 11 - Fenton, Inc., has established a new strategic plan...
Additional Business Textbook Solutions
Find more solutions based on key concepts
S6-2 Determining inventory costing methods
Ward Hard ware does not expect costs to change dramatically and want...
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Prepare a production cost report and journal entries (Learning Objectives 4 5) Vintage Accessories manufacture...
Managerial Accounting (5th Edition)
Joint costs and byproducts. (W. Crum adapted) Royston, Inc., is a large food-processing company. It processes 1...
Cost Accounting (15th Edition)
Net Operating Loss, Carryforward, Tax Rate Change. Hamilton Container Company reported the following income (lo...
Intermediate Accounting
Horizontal analysis(Learning Objective 2)15-20 min. Below are net sales and net income data for a five-year per...
Financial Accounting, Student Value Edition (4th Edition)
Determine the monthly payment for a 30-year real estate loan with an APR of 8.5% and an initial principal of $2...
Construction Accounting And Financial Management (4th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Explain to a friend or relative how you would use the TVM concept to achieve their desired retirement amount. How much would they need to retire? How would you develop a savings plan using that number? Use Excel to calculate and explain the numbers when posting to the forum. Include the interest rate and investment. Starting amount is 45,000 at age 30 with the retirement age of 67arrow_forwardDetermine whether or not the following situation describes an annuity. If it is an annuity, determine whether the jackpot amount is the annuity's present value or future value. Also, determine whether it is an ordinary annuity or an annuity due.Sam won a lottery jackpot which will pay him $2250 every week for 20 years, starting immediately. Group of answer choices The situation describes a future value of an ordinary annuity. The situation describes a present value of an annuity due. The situation does NOT describe an annuity. The situation describes a future value of an annuity due. The situation describes a present value of an ordinary annuity.arrow_forward9. Implied interest rate and period Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Joshua inherited an annuity worth $6,830.77 from his uncle. The annuity will pay him eight equal payments of $1,100 at the end of each year. The annuity fund is offering a return of Joshua's friend, willie, has hired a financial planner for advice on retirement. Considering Willie's current expenses and expected future lifestyle changes, the financial planner has stated that once Willie crosses a threshold of $1,387,311 in savings, he will have enough money for retirement. Willie has nothing saved for his retirement yet, so he plans to start depositing $25,000 in a retirement fund at a fixed rate of 6.00% at the end of each year. It will take v for Willie to reach his retirement goal.arrow_forward
- Provide manual solutions for below mentioned problems. A social worker deposits a uniform amount of P12,000 at the end of each year in order to get a lump sum of money by the time she will retire at the end of 20 years. If the compound amount factor for this annuity is equal to 36.78559. 1. Compute the nominal interest rate.2. Determine how much will she receive at the end of 20 years.3. Determine the worth of the sinking fund factor in this fund invested. Answer. 1. 6% 2. P441,427.08 3. 0.027184557arrow_forwardYou would like to have enough money saved to receive a $90,000 per year perpetuity after retirement. The annual interest rate is 8 percent. Required: How much would you need to have saved in your retirement fund to achieve this goal? a) Assume that the perpetuity payments start on the day of your retirement. b) Assume that the perpetuity payments start one year from the date of your retirement.arrow_forwardSuppose that Joseph, an existing customer of this product (with the arrangement specified above), has just received the fifth payment of this annuity. Using the prospective method, how much money does Wagon Financial need to have set aside today (immediately after the fifth payment is made) to be sure that they can afford to make all future payments to Joseph?arrow_forward
- Today is 1/7/2021, John plans to deposit $500 at the beginning of each month into an investment fund. The first deposit will be deposited today. John predicts that the return rate of this fund will be j 2 = 3.2% from 1/7/2021 to 30/9/2021 and j2 = 4.83% from 1/10/2021 to 31/12/2021. What will be balance amount of this account on 31/12/2021? Round your answer to three decimal places.Question 11 Answer a. 3037.527 b. 3038.404 с. 3038.048 d. 3039.408arrow_forwardToday is 1/7/2021, John plans to deposit $500 at the beginning of each month into an investment fund. The first deposit will be deposited today. John predicts that the return rate of this fund will be j2=2.23% from 1/7/2021 to 30/9/2021 and j2=4.3% from 1/10/2021 to 31/12/2021. What will be balance amount of this account on 31/12/2021? Round your answer to three decimal places. a. 3032.601 b. 3033.695 c. 3032.335 d. 3031.814arrow_forwardToday is 1/7/2021, John plans to deposit $500 at the beginning of each month into an investment fund. The first deposit will be deposited today. John predicts that the return rate of this fund will be j2=3.59% from 1/7/2021 to 30/9/2021 and j2=3.93% from 1/10/2021 to 31/12/2021. What will be balance amount of this account on 31/12/2021? Round your answer to three decimal places. Question Answer a. 3034.806 b. 3032.925 c. 3033.446 d. 3033.714arrow_forward
- A trust notifies you that you are entitled a grant that would give you annual payments of $6,200 per year in perpetuity. The first payment will be made to you three years later (at the end of year 3). The annual interest rate is 10% (APR). What is the present value of the grant? A. 56,363.64 B. 46,581.52 C. 51,239.67 D. 62,000.00arrow_forwardMrs. Crawford will receive $9,250 a year for the next 14 years from her trust. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.If a 8 percent interest rate is applied, what is the current value of the future payments? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)arrow_forwardA policyholder wishes to annuitize the cash value of her insurance policy at retirement. She desires an annual payment of $97.8,000 per year and the cash value is expected to be $1.5 million at retirement. Approximately how many payments can she expect to receive if annuity interest rates are 5.739 percent? (Do not round intermediate calculations. Round your answer to a whole number.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College