Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 11, Problem 11E
To determine
Determine the increase or decrease in present value of winnings using an interest rate of 10% and 6%.
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Increasing the number of periods will increase all of the following except:
Select one:
A.
The present value of an annuity
B.
The present value of $1
C.
The future value of $1
D.
The future value of an annuity
Increasing the number of periods will increase all of the following except
Select one:
a.
the present value of $1.
b.
the future value of an annuity.
c.
the future value of $1.
If annuity A has 30 payments of $500 at an interest rate of 10% and annuity B has 30 payments of $500 at an interest rate of 9%, which one has the higher present value?
Select one:
a.
Not enough information to determine.
b.
B
c.
A
Chapter 11 Solutions
Financial And Managerial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 12%...Ch. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Fleeson Company needs additional funds to purchase...Ch. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 3BECh. 11 - Prob. 4BECh. 11 - Prob. 5BECh. 11 - Prob. 6BECh. 11 - Times interest earned Averill Products Inc....Ch. 11 - Prob. 1ECh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 7ECh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 9ECh. 11 - Present value of an annuity On January 1, you win...Ch. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Appendix 2 Amortize premium by interest method...Ch. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PACh. 11 - Entries for bonds payable, including bond...Ch. 11 - Appendix 1 and Appendix 2 Bond discount, entries...Ch. 11 - Prob. 5PACh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PBCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 4PBCh. 11 - Prob. 5PBCh. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Analyze and compare Clorox and Procter Gamble The...Ch. 11 - Prob. 3MADCh. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Prob. 1TIFCh. 11 - Prob. 3TIFCh. 11 - Prob. 4TIF
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- Use the formula for the present value of an ordinary annuity or the amortization formula to solve the following problem. PV=$12,00; PMT=$400; n=55; =i?arrow_forwardUse a calculator to evaluate the present value of an annuity formula P = m 1 − 1 + r n −nt r n for the values of the variables m, r, and t (respectively). Assume n = 12. (Round your answer to the nearest cent.) $50; 3%; 6 yr $arrow_forwardUsing an annuity, you may calculate the present value of a single payment or a series of payments you will receive. Is this statement correct or incorrect?arrow_forward
- The present value of a perpetuity is equal to the payment on the annuity, PMT, divided bythe interest rate, I : PV = PMT/I. What is the future value of a perpetuity of PMT dollars peryear? (Hint: The answer is infinity, but explain why.)arrow_forwardvalue of a future payment change as the un to recelpt is lengthened? As the interest rate increases? What's the difference between an ordinary annuity and an annuity due? Why would you prefer to receive an annuity due for $10,000 per year for 10 years than an otherwise similar ordinary annuity? iii.arrow_forwardIn the present value of an annuity due table, the factors ________. Group of answer choices decrease as the interest rates increase, given a set number of periods decrease as the periods increase, given a set interest rate increase as the periods decrease, given a set interest rate increase as the interest rates increase, given a set number of periodsarrow_forward
- Complete the following for the present value of an ordinary annuity. (Use Table 13.2.) (Do not round intermediate calculations. Round your answer to the nearest cent.) Present value (amount needed now to invest to receive annuity) Amount of Payment Time Interest rate annuity expected %24 860 Annually 5 years 7 % acerarrow_forwardSolve the problem. solve using the formula for the future value of an ordinary annuity. given the monthly payment, capital, the annual interest rate, are, and the number of monthly payments, antique, find the future value of the annuity. R=$1300; r = 8.5%; nt= 17 A) $24,398.04 B) $17,548.36 C) $23,397.81 D) $24,198.38 Please search only correct answer as I am | paying for this and I keep receiving incorrect onearrow_forwardAnnuity A and B are exactly the same except that annuity A has an interest rate of 4% and annuity B has an interest rate of 5%, which one has the higher future value? Select one: a. B b. A=B c. Aarrow_forward
- Future Value of an Annuity Refer to each case in the table below to answer what is required in this problem. Required: Find the future value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity—ordinary or annuity due—is preferable? Explain why.arrow_forwardUse a calculator to evaluate the present value of an annuity formula for the values of the variables m, r, and t (respectively). Assume n = 12. (Round your answer to the nearest cent.) $1,050; 6%; 7 yrarrow_forwardThe present value of an ordinary annuity, PAN, is the value today that would be equivalent to the annuity payments (PMT) received at fixed intervals over the annuity period. The equation is: Each payment of an annuity due is discounted for one less (1 + I). The equation is: PVAN= PMT 1- (1+1)N I period, so the present value of an annuity due is equal to the present value of an ordinary annuity multiplied by PVA due PVA ordinary (1+1) One can solve for payments (PMT), periods (N), and interest rates (I) for annuities. The easiest way to solve for these variables is with a financial calculator or a spreadsheet. Quantitative Problem 1: You plan to deposit $1,700 per year for 5 years into a money market account with an annual return of 2%. You plan to make your first deposit one year from today. a. What amount will be in your account at the end of 5 years? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. Assume that your deposits will begin today. What…arrow_forward
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