1. Car loan Planning to give his son a car as a gift when he graduates from college 2 years from now, Adam decides to set aside a fund to enable him to pay the expected monthly amortization of P 21,500.00 every month for 3 years. If a bank offers to pay an interest of 7.5% compounding monthly, how much should be set aside in order to achieve his plan?
1. Car loan Planning to give his son a car as a gift when he graduates from college 2 years from now, Adam decides to set aside a fund to enable him to pay the expected monthly amortization of P 21,500.00 every month for 3 years. If a bank offers to pay an interest of 7.5% compounding monthly, how much should be set aside in order to achieve his plan?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.12AMCP
Related questions
Question
Solve for the deffered annuity
Transcribed Image Text:Solve the following problems.
1.
Car loan
Planning to give his son a car as a gift when he graduates from college 2 years
from now, Adam decides to set aside a fund to enable him to pay the expected
monthly amortization of P 21,500.00 every month for 3 years. If a bank offers to
pay an interest of 7.5% compounding monthly, how much should be set aside in
order to achieve his plan?
2.
Real Estate
A house and lot package is available at P 27,000.00 monthly payable in 20
years. The first payment is due in 2 years exactly the time when the house unit
will be turned in to the buyers. How much is the cash value if the interest rate is
7.5% convertible monthly?
Sketch a time diagram or timeline for each problem.
Rubrics for rating the output:
Score Descriptors
The situation is correctly modeled with a deferred annuity, appropriate
mathematical concepts are fully used in the solution and the correct
20
final answer is obtained.
16
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