Larry Mattingly turned 20 years old today. His grandfather had established a trust fund that will pay him $87,000 on his next birthday.However, Larry needs money today to start his college education, and his father is willing to help. Mr. Mattingly has agreed to giveLarry the present value of the $87,000 future cash inflow, assuming a 12 percent rate of return. (PV of $1 and PVA of $1) (Useappropriate factor(s) from the tables provided.)Requireda. Determine the amount of cash that Larry Mattingly's father should give him. (Round your final answer to the nearest whole dollarvalue.)Cash

Present value or PV is the discounted worth of a future cash flow taking into consideration the time…

Answered: Larry Mattingly turned 20 years old…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume you are working with the foundation to fund a scholarship in your name. Currently, the foundation can earn a 5 percent return on any donations. A. How much money would you need to donate to fund a scholarship that pays $25,000 every year forever, starting one year from now? B. How much money would you need to donate if the foundation could increase their return to 7 percent on any donations?
When Joe graduated from college at age 22, his grandparents established a trust fund and endowed it with $10,000. The gift is intended to serve as a retirement fund for Joe, and he will be able to draw on it when he turns 62. If the fund earns a nine percent return over that period, what will it be worth when Joe reaches age 62? [submit your answer with a comma but no dollar signs]
Raymond just inherited $10000. How much should Raymond deposit in an account earning 6% interest per year if he would like to have $18500 in his account in 20 years? Include a cash flow diagram in your solution. urgent
(b) Chris Hitchcock is 43 years old today and he wishes to accumulate $512.000 by his 65 th birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his 43 th through his 64 th birthdays. What annual deposit must Chris make if the fund will earn 8% interest compounded annually? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Annual deposit eTextbook and Media Save for Later Attempts: unlimited Submit Answer %24
Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 4.57% p.a. compounded half-yearly (j2=4.57% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)? Question 9 Answer a. 127913.37 b. 255507.69 c. 260410.57 d. 258749.57 Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 4.57% p.a. compounded half-yearly (j2=4.57% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (b) Assume that two years after the donation, Mike needs to withdraw $1,000,000 from the fund and use the remaining amount to provide an annual scholarship in perpetuity. The time of the first scholarship will be unchanged (3.5 years after the date of the donation). What is the new annual…
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Trent and Doris Phillips have a new grandchild, William. They want to create a trust fund for him that will yield $280,000 on his 18th birthday. a) What lump sum would they have to deposit now at 5.4%, compounded continuously, to achieve $280,000? b) Trent and Doris decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the continuous money stream is $280,000, assuming an interest rate of 5.4%, compounded continuously. a) To achieve $280,000, they would have to deposit $ (Round to the nearest cent as needed.) b) To achieve $280,000, they would need a constant money stream of $ per year. (Round to the nearest cent as needed.)
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A man won 300,000 in a lottery decided to place 50% of his winning in a trust fund for the college education of his son. If the money will earn 14% per year compounded quarterly, how much will be the money at the end of ten years when his son will be starting his college education? Provide the cash flows and diagram.
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Jeremiah Wood wants to set up a fund to pay for his daughter's education. In order to pay her expenses, he will need $22,000 in four years, $23,400 in five years, $24,600 in six years, and $26,100 in seven years. If he can put money into a fund that pays 5 percent interest, what lump-sum payment must Jeremiah place in the fund today to meet his college funding goals? Round the answer to the nearest cent. Round PV-factor to three decimal places.
A favorite aunt wishes to establish a trust fund for her niece's math education. How much should she set aside now if she wants $45, 000, 7 years from now, and interest is compounded continuously at 5%? O $45,000(1.05)-7 O $45,000e -1.95 $45,000e-0.35 O $45,000e-0.05 O $45,000(1.05)- -0.35

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