EBK ACCOUNTING PRINCIPLES
13th Edition
ISBN: 9781119411017
Author: Weygandt
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Question
error_outline
This textbook solution is under construction.
Students have asked these similar questions
Suppose your expenses for this term are as follows: tuition: $12,000, room and board: $6,500, books and other educational supplies: $1,500. Further, during the term, you can only work part-time and earn $3,500 instead of your full-time salary of $14,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?
$13,500
$20,000
$24,000
$30,500
3. Suppose a high schools graduate earns $40,000 per year while a college graduate makes $80,000.
Assume these wages will not change over time, and there are no other benefits to going to college.
Explicit costs of going to college (tuition, books, supplies, etc.) are $30,000 per year. Ignore the psychic
costs. The college education lasts four years. The retirement age is 65.
a. Say an 18 year-old decides to obtain college education. What can her annual discount rate be?
b. Say a 40 year-old has a discount rate of 5%. Will this person go to college?
After years of being a poor, debt-encumbered college student, you decide that you want to pay for your dream car in cash. Not having enough money now, you decide to specifically put money away each year in a “dream car” fund. The car you want to buy will cost $60,000 in eight years. You are going to put aside $6,000 each year (for eight years) to save for this. At what interest rate must you invest your money to achieve your goal of having enough to purchase the car after eight years?
Knowledge Booster
Similar questions
- “Suppose that your parents are willing to lend you $20,000 for part of the cost of your college education and living expenses. They want you to repay them the $20,000 without any interest, in a lump sum 15 years after you graduate, when they plan to retire and move. Meanwhile, you will be busy repaying federally guaranteed loans for the first 10 years after graduation. But you realize that you won’t be able to repay the lump sum without saving up. So you decide that you will put aside money in an interest-bearing account every month for the first five years before the payment is due. You feel comfortable with setting aside $275 a month (the amount of the payment on your college loans, which will be paid off after 10 years). How high an annual nominal rate on savings do you need to accumulate the $20,000, in 60 months, if interest is compounded monthly? Enter into a spreadsheet the values of d = 275, r = 0.05 (annual rate), and n = 60, and the savings formula with r replaced…arrow_forwardImagine that a student graduated from college with a degree in education, and they got a full-time job in teaching. This work, which usually consists of teaching five days a week, brings in about $3,200 a month. This individual is living with their parents, but have credit card bills, car payments, student loan payments, car insurance payments, etc. Their total debt is $53,000. If they cannot make all the payments due monthly on their debts, which of the following is the best answer? They can file a Chapter 13 and the trustee in bankruptcy will reduce some of their debt and extend it over a longer time. They cannot file for bankruptcy because their debt is too low. O They cannot file for a Chapter 7 Bankruptcy. They will not qualify for a Chapter 13 Bankruptcy. none of thesearrow_forwardSuppose that your parents are willing to lend you $20,000 for part of the cost of your college education and living expenses. They want you to repay them the $20,000, without any interest, in a lump sum 15 years after you graduate, when they plan to retire and move. Meanwhile, you will be busy repaying federally guaranteed loans for the first 10 years after graduation. But you realize that you won’t be able to repay the lump sum without saving up. So you decide that you will put aside money in an interest-bearing account every month for the five years before the payment is due. You feel comfortable with putting aside $275 a month (the amount of the payment on your college loans, which will be paid off after 10 years). How high an annual nominal interest rate on savings do you need to accumulate the $20,000 in 60 months, if interest is compounded monthly? Enter into a spreadsheet the values d 5 275, r 5 0.05 (annual rate), and n 5 60, and the savings formula with r replaced by r/12 (the…arrow_forward
- Suppose that you need $30,000 for your last year of college. You could go to a private lending institution and apply for a signature student loan; rates range from 7% to 14%. However, your Aunt Sally is willing to loan you the money from her retirement savings, with no repayment until after graduation. All she asks is that in the meantime you pay her each month the amount of interest that she would otherwise get on her savings (since she needs that to live on), which is 4%.What is your monthly payment to her, and how much interest will you pay her over the year (9 months)?(Fill in the blanks below and give your answers as whole numbers.)The amount of interest per month you would pay Aunt Sally is $__(1)__ .The total interest you will pay her over the year (9 months)is $__(2)__ .arrow_forwardSuppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs, average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year. Assuming that costs continue to increase an average of 4% per year, how much is the tuition and other costs for one year for this student in 18 years when she enters college?arrow_forwardOften, through government-supported programs, students may obtain "bargain" interest rates such as 6% or 8% to attend college. Frequently, payments are not due and interest does not accumulate until the student stops attending college. A student has borrowed $32,000 at an annual interest rate of 6.3%. Calculate the amount of interest due 6 months after the student must begin payments. The interest due is $_____arrow_forward
- Bankrate.com reported on a shocking statistic: only 55% of workers participate in their company’s retirement plan. This means that 45% do not. With such an uncertain future for Social Security, this can leave almost 1 in 2 individuals without proper income during retirement. Jill Collins, 25, decided she needs to have $190,000 in her retirement account upon retiring at 60. How much does she need to invest each year at 4% compounded annually to meet her goal? (Please use the following provided Table.) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)arrow_forwardSinking fund factor of $1 per period at i% for n periods. 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0.4975 0.4963 0.4950 0.4938 0.4926 0.4914 0.3300 0.3284 0.3268 0.3251 0.3235 0.3219 0.2463 0.2444 0.2426 0.2408 0.2390 0.2373 0.1960 0.1941 0.1922 0.1902 0.1884 0.1865 0.1625 0.1605 0.1585 0.1565 0.1546 0.1527 0.1386 0.1366 0.1345 0.1325 0.1305 0.1285 0.1207 0.1186 0.1165 0.1145 0.1125 0.1105 0.1067 0.1046 0.1025 0.1005 0.0984 0.0964 0.0956 0.0934 0.0913 0.0893 0.0872 0.0852 0.0865 0.0843 0.0822 0.0801 0.0781 0.0761 0.0788 0.0767 0.0746 0.0725 0.0705 0.0685 0.0724 0.0702 0.0681 0.0660 0.0640 0.0621 0.0669 0.0647 0.0626 0.0605 0.0585 0.0566 0.0621 0.0599 0.0578 0.0558 0.0538 0.0518 0.0579 0.0558 0.0537 0.0516 0.0496 0.0477 0.0543 0.0521 0.0500 0.0479 0.0460 0.0440 0.0510 0.0488 0.0467 0.0447 0.0427 0.0408 0.0481 0.0459 0.0438 0.0418 0.0398 0.0379 0.0454 0.0432 0.0412 0.0391 0.0372 0.0354 0.0430 0.0409 0.0388 0.0368 0.0349 0.0330 0.0409 0.0387 0.0366 0.0346…arrow_forwarda). Akua intends to save 1,000 a year for her retirement until she is 55 years old, at this age, she will stop paying into the account, though she will retire at 65. If the retirement account earns 10% interest per year, how much will Akua have saved at age 65? She is 35 years at the moment. b). Financial markets and its institutions are seen as the central nervous system of an economy and must be regulated at all times. Discuss the key roles played by financial markets, and outline two (2) reasons why they must be regulated. c). Explain the difference between money market and capital market and mention two (2) securities traded in each of these markets. d). MTN was able to raise only GH¢1.15billion out of the expected GH¢3.48billion from its Initial Public Offering which lasted from May 29, 2018 to July 31, 2018. Even though the share sale exceeded the minimum of GH¢348million or 10 percent of the total required for the offer to be declared successful, it still represented only 32.97…arrow_forward
- Suppose your expenses for summer school are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term?arrow_forwardYou currently pay $10,000 per year in rent to a landlord for a $100,000 house, which you are considering purchasing. You can qualify for a loan of $80,000 at 9% if you put $20,000 down on the house. To raise money for the down payment, you would have to liquidate stock earning you a 15% return. We neglect other concerns, like closing costs, capital gains, and tax consequences of owning. Given the described situation, determine whether it is better to rent or own.arrow_forwardImagine that you have worked every summer for the last four years in order to save money to buy a car. You have $23,000 deposited in a savings account at your local bank. One day, you turn on the news and discover that the stock market is crashing and people are rushing to banks to withdraw all of their money. Your best course of action is to:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning