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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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]
Robert has inherited some money from his great-grandfather. He will get $5,533.00 when he graduates college (at age 22) and an additional $13,597.00 at the age of 25. He is currently 20 years old. Robert will invest each cash flow in an account that pays 6.00% APR. What will be the future value of this account if he keeps it invested until he turns 30?
(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
Atita plans to gift $150,000 to her daughters as a gift in the future. She thinks it will help her daughter fulfil her dreams when she reaches her age to marry. Assume her daughter is 3 years old and may get married in her 20s. Assume that Atita has $30,000 and wishes to invest that in a financial asset with a 9% rate of return per annum. Required: How would you define the amount of $30 000 and $150 000 in terms of the time value of money? ANSWER a (i): (answer box will enlarge as you enter your response) How long will she have to wait until she reaches the goal of $150 000? ANSWER a (ii): Mark will receive $13,500 from his parent at the end of each year for five years. He plans to invest them in a financial asset with an interest rate of 7.5%. How much money…
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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When Aroon was a small child, his grandfather established a trust fund for him to receive $20,000 on his 35th birthday. Aroon just turned 23. What is the value of his trust today if the trust fund earns 5 percent interest? If he had to wait until age 40 to receive the money, what is the present value today of the $20,000 to be received in 17 years? Click the following table icon to view the PVIF table: The present value, PV, of his trust today if the trust fund earns 5 percent interest is $ A LO a 863367 (Round to the nearest cent.)
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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Answer each of the following independent questions. Ignore personal income taxes. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Suppose you invest $4,100 in an account bearing interest at the rate of 10 percent per year. What will be the future value of your investment in five years? 2. Your best friend won the state lottery and has offered to give you $11,600 in four years, after he has made his first million dollars. You figure that if you had the money today, you could invest it at 8 percent annual interest. What is the present value of your friend’s future gift? 3. In four years, you would like to buy a small cabin in the mountains. You estimate that the property will cost you $68,500 when you are ready to buy. How much money would you need to invest each year in an account bearing interest at the rate of 4 percent per year in order to accumulate the $68,500 purchase price? 4. You have estimated that your educational expenses…
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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