Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter II, Problem 9E
1.
To determine
Calculate how much amount needs to accumulate at the time of retirement or present value of ordinary annuity
2.
To determine
Calculate the how much money required to pay in each of the 15equal instalments.
3.
To determine
Identify whether the given problem is future value or present value.
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You want to be able to withdraw $40,000 from your account each year for 25 years after you retire. If you expect to retire in 15 years and your account earns 6.6% interest while saving for retirement and 6.2% interest while retired:Round your answers to the nearest cent as needed.a) How much will you need to have when you retire?$b) How much will you need to deposit each month until retirement to achieve your retirement goals?$c) How much did you deposit into you retirement account?$d) How much did you receive in payments during retirement?$e) How much of the money you received was interest?$
You want to be able to withdraw $35,000 from your account each year for 25 years after you retire.You expect to retire in 20 years.If your account earns 4% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?$
2. (From section 6.2) You want to be able to withdraw $50,100 from your account each year for 20
years after you retire. You expect to retire in 35 years. If your investment account earns 5.5%
interest, how much will you need to deposit into the account at the end of each year until you
reach retirement to achieve your retirement goals?
(a) The first part is finding how much we need to have in the account by the time we retire.
Which formula will you use first? Circle one.
Annuity
Payout-Annuity
(b) What are the following variables that we will need for the formula?
PMT =
n =
t =
r =
A or Po =
(c) Write the formula you will use with the numbers plugged in below.
(d) Solve using your calculator or technology and round to two decimal places. Work is not
required here. Write the answer here and state which variable you solved for.
(e) Using your own words, describe what you found by solving the equation in terms of the word
problem given.
Chapter II Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?arrow_forwardUse the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?arrow_forwardRefer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264arrow_forward
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