Answered: 559. 1. Compute the nominal interest…

559. 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.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 13E

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Concept explainers

Emergency Fund

The emergency fund is an amount that is kept aside to meet financial emergencies such as medical expenses and debt settlements. Emergency funds reduce the burden on people during their hardships. People save small portions of their earnings or paychecks as emergency funds to meet financial emergencies. Emergency funds should be saved or invested in such a way that they must be easily liquidated during emergencies. The main purpose of an emergency fund is its availability when required.

Question

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. 0.027184557

Problem 1
A social worker deposits a uniform amount of P12,000 at the cnd of cach ycar 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.
Ans.
1. 6%
2. P441,427.08
3. 0.027184557

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