A business promises to pay the investor of $2,000 today for a payment of $500 in one year's time, $1,000 in two years' time and $1,000 in three years' time. What is the present value of this business opportunity if the interest rate is 3% per year? A. $412 B. $343 C. $172 D. $549
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- Mohammed LLC is a growing consulting firm. The following transactions take place during the current year. A. On June 10, Mohammed borrows $270,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in four months from June 10, and annual interest rate of 5%. B. On July 9, Mohammed borrows an additional $100,000 with payment due in four months from July 9, and an annual interest rate of 12%. C. Mohammed pays their accounts in full on October 10 for the June 10 loan, and on November 9 for the July 9 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Mohammed.McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
- Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600Use Future Value and Present Value Tables to Apply Compound Interest to Accounting Transactions Kristen Quinn makes equal deposits of $500 semiannually for 4 years. Required: What is the future value at 8%? (Note: Round answers to two decimal places.)Sunlight Growers borrows $250,000 from a bank at a 4% annual interest rate. The loan is due in three months. At the end of the three months, the company pays the amount due in full. How much did the company remit to the bank? A. $250,000 B. $10,000 C. $252,500 D. $2,500
- Samuel Ames owes 20,000 to a friend. He wants to know how much he would have to pay if he paid the debt in 3 annual installments at the end of each year, which would include interest at 14%. Draw a time line for the problem. Indicate what table to use. Look up the table value and place it in a brief formula. Solve.Future Value of a Single Cash Flow Jenkins Products has just been paid $25,000 by Shirley Enterprises, which has owed Jenkins this amount for 30 months but been unable to pay because of financial difficulties. Had it been able to invest this cash, Jenkins assumes that it would have earned an interest rate of 12% compounded monthly (1% per month). Required: Note: Round answers to two decimal places. 1. Prepare a cash flow diagram for the investment that could have been made if Shirley had paid 30 months ago. 2. Determine how much Jenkins has lost by not receiving the $25.000 when it was due 30 months ago. 3. CONCEPTUAL CONNECTION Indicate whether Jenkins would make an entry to account for this loss. Why or why not?Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 8.5%. Each year on December 31, the company pays down the principal balance by $80,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
- A business promises to pay the investor of $4,000 today for a payment of $1,000 in one year's time, $2,000 in two years' time and $2,000 in three years' time. What is the present value of this business opportunity if the interest rate is 2% per year?Please calculate the interest that has been accrued as of December 31, 2014 in the given scenario. You invest $90,000 with a small business that has promised to pay you interest at a 6.5% rate. After 210 days, the small business will return the $90,000 plus interest to you. You invest with the business on August 1, 2014.Ansel Accounting Firm rents an office space for $250,000 per year which is due at the beginning of each year. If the hurdle rate of Ansel Accounting Firm is 10%, how much is the present value of five years' worth of rent? a. $1,042,466.36 b. $402,627.50 c. $155,230.33 d. $170,753.36