A friend tells you she has saved for 10 years and has a present sum of $20,000, which earned at the rate of 10% per year. Determine the equivalent amount she had to start with 10 years ago? Draw a cash flow diagram and do a manual solution.

A friend tells you she has saved for 10 years and has a present sum of $20,000, which earned at the rate of 10% per year. Determine the equivalent amount she had to start with 10 years ago? Draw a cash flow diagram and do a manual solution.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3EB: A restaurant is considering the purchase of new tables and chairs for their dining room with an...

See similar textbooks

Related questions

Q: 3. A person deposits $18,000 in a fund that pays interest at the rate of 6% continuously. He…

Q: A young man has decided to go into the business at the age of 25, he deposits a certain amount and…

A: N = Number of deposits = 11 Annual Increase in deposit = 50,000 Future Value Required = 30,000,000…

Q: Find the present value of this cash flow stream. 2. Find the future…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: You receive $100 today, $200 in one year, and $300 in two years. If you deposit these cash flows…

A: Formula FV = CF0*(1+R)3+CF1*(1+R)2+CF2*(1+R)1 Where FV - Value of account after 3 years R - Interest…

Q: Arona would like to receive $15,820 each year for the next 5 years, starting today. Then she hopes…

A: Since payment is due today or at the beginning of the year, this is annuity due problem. For…

Q: Mr. Rambo wants to save for a new pickup that he expects will cost 1,900,000 four and one-half years…

A: Cost = 1,900,000 four and half years from now N = 4 Interest Rate = 6.25%

Q: Engr. Secula started saving ₱2000.00 each year for 25 years until his retirement at 65 years old. A…

A: Annual deposit =2000 interest rate =9% and period =25 Future value FACTOR =(1.09)^25- 1/0.09 Future…

Q: Which is more valuable to you today--receiving $5,000 for each of the next 3 years OR receiving…

A: solution concept Time value of money This concept is related to the value of money that differs with…

Q: Draw the cash flow diagram for each problem and use interest rate with five decimal places. A…

A: In this we have to calculate present value of ANNUITY FACTOR and from that we can get the six…

Q: Engr. Secula started saving ₱2000.00 each year for 25 years until his retirement at 65years old. A…

A: Future value of Annuity can be calculated using the following formula: FVAn=A1+rn-1r where FVAn=…

Q: Build a Cash Flow Diagram and determine the amount in the account immediately after ten years. Show…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Solve the following problems. You must show all your solutions -Draw the cash flow diagram for each…

A: The Present Value of perpetuity: A constant cash flow that occurs periodically forever is known as…

Q: Daryl Kearns saved $220,000 during the 25 years that he worked for a major corporation. Now he has…

A: solution a: Computation of NPV Opportunity 1 Opportunity 1 Particulars…

Q: A man wishes his son to receive P200, 000 ten years from now. What amount should he invest if it…

A: Here we are given the future value which is P200,000. We have to find the amount to be invested…

Q: A woman deposits an annual bonus into a savings account that pays 6% interest compounded monthly.…

A: Here the deposits are made annually while the interest is compounded monthly. Thus we first need to…

Q: Daryl Kearns saved $240,000 during the 30 years that he worked for a major corporation. Now he has…

A: Net present value is the sum of the present value of net of all cash outflows and inflows discounted…

Q: Suppose you make an annual contribution of BD100 each year to a college education fund for a niece.…

A: Here, Annual Deposits is BD100 Interest Rate is 6.5% Current Age is 4 years Last Deposit is made on…

Q: Your friend is considering investing $10,000 starting at the end nvestment account and this cash…

A: This is problem of future value of growing ANNUITY and can be done using formula. Future value of…

Q: A friend tells you she has saved for 7 years and has a present sum of $10,000, which earned at the…

A: a) Computation:

Q: JOTARO started saving $2,000 each year for 25 years until his retirement at 65 years old. A year…

A: Sometimes, some cash inflows or cash outflows are unknown in the savings or withdrawal schedule. The…

Q: The present worth of all the cashflows of handmade earthen pots are shown until the end of year 8 is…

A: Given, The present worth of cashflows is $9,330 Discount rate is 12%

Q: one wants to know the amount of money she will be receiving after 6 months pinion if she will be…

A: The future value of money includes the amount deposited and interest being accumulated over the…

Q: a) if the interest rate is 8%, what is the present value of the cash flows? b) what is the future…

A: The time value of money implies that the cash in hand at present has a higher value than the cash…

Q: A young woman, 22 years old, has just graduated from college. She accepts a good job and desires to…

A: Let the duration required to accumulate P 1000000 = n years Also, the year end deposits (A) = P 2000…

Q: Your boss wants to buy an equipment for 30,000php. It is believed that this equipment will bring an…

Q: wishes to accumulate P2,500 over a period of 15 yrs so that a cash payment can be made for a new…

A: The given problem can be solved using PMT function in excel. PMT function computes savings/…

Q: A man purchases a lot worth 1,000,000 if paid in cash. On installment basis, he paid P200,000 down…

A: Purchase price = 1,000,000 Down payment = 200,000 Payment at the end of year 1 = 300,000 Payment at…

Q: lan is considering investment online publishing company and needs to work out the present value. He…

A: Following details are given in the question : Future value of cashflow = $100000 Time period = 4…

Q: Calculate how much will Sonja have in a savings account 12 years if she deposits RM 3,000 now and RM…

A: Future value of amount includes the amount deposited and interest accumulated over the period of…

Q: Depict the following transactions on a certain cash flow diagram: • Depositing $4,000 today and…

A: Deposit = $4,000 Withdrawal after 2 years = $2,000 Remaining Withdrawal = 4 years Interest Rate =…

Q: Answer and draw neatly the necessary cash flow diagrams, and box your final answers. A student…

A: Effective Rate = 10% Deposit at time 0 = 1500 Deposit for next two years = 3000 Withdrawal after 3…

Q: If you are paid $1,000 at the end of each year for the next five years, what type of cash flow did…

A: Cash flow is defined as the net amount of cash and cash equivalents carried into and out of a…

Q: Draw cash flow diagram and show your solution An individual makes six annual deposits in a savings…

A: Cash flow and profit are two crucial financial variables in business, and it's not uncommon for…

Q: 1-10. Suppose Mr. Claude would like to save P10,000 every month in a fund that gives 9% compounded…

A: Since you posted multiple questions, we will solve the first question for you. The annuity is a…

Q: JOTARO started saving $2,000 each year for 25 years until his retirement at 65 years o retired, he…

A: Future value FACTOR =(1+r)n-1/r Future value FACTOR =(1.09)25-1/0.09 Future value FACTOR =84.70…

Q: Consider two investments: Invest $1,000 and receive $110 at the end of each month for the next 10…

A: The future worth of both the options can be calculated as follows : Results obtained :

Q: A financial adviser is reviewing one of her client's accounts. The client has been investing $1,000…

A: Monthly investment = $1,000 Compounded = quarterly = 4 times in a year Interest rate = 7.3% Time…

Q: Engr. Secula started saving ₱2000.00 each year for 25 years until his retirement at 65 years old. A…

Q: Loni buys a machine for her business. The machine costs $280,000. Loni estimates that the machine…

A: Machine cost = $ 280,000 Annual cash inflow = $ 64,000 Cost of capital = 7% Period = 9 Years

Q: Calculate how much will Sonja have in a savings account 12 years from now if she deposits RM 3,000…

A: Given in the question: Rate of Interest 10% Period 12 Years Initial Deposit…

Q: Harley worked for many years to save enough money to start his own residential landscape design…

A: External rate of return is the rate at which the extra cash flow form the project is expected to…

Q: Raymond just inherited $10000. How much should Raymond deposit in an account earning 6% interest per…

A: Present value is the estimation of future value today. The investor does so for the purpose of…

Q: Suppose that P400 is deposited each year into a bank account that pays 8% interest annually. If 12…

A: Future value of annuity is regular deposit of fixed sum into a bank account, that will give certain…

Q: Suppose that P 4500 is deposited each year into a bank account that pays 8% interest compounded…

A: When an amount is deposited in any account, it pays interest. A series of equal annual payments is…

Q: How much is the present value of a perpetuity of P1,000 payable semi-annually if money is worth 5%…

A: Present value of perpetuity is calculated for those securities from which keeps generating cash…

Q: Your mother plans to join the employee's cooperative. She wants to know how much her money would…

A: The interest on the money invested is earned for period it is invested in the scheme. The interest…

Q: 4. A young man has decided to go into the business at the age of 25, he deposits a certain amount…

A: The future value = 30 million or 30,000,000 Here n = 11 years (duration between 35 years and 25…

Q: 1. Engr. Johnson started saving ₱2000.00 each year for 25 years until his retirement at 65 years…

A: Final withdrawal amount is the amount which will be withdrawn at the last instalment from the…

Q: A man was offered a Land Bank Certificate with a face value of P100,000 which bears interest of 8%…

A: Face value of certificate = P 100,000 Interest rate = 8% Semi annual interest payment =…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Money Management and Achieving Financial Goals

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
Refer to the present value table information on the previous page. If Kathleen put 3,000 in a savings account today, what amount of cash will be available 2 years from today? a. 3,000 0.857 b. 3,000 0.857 2 3,000 c. 4,000 0.681 0926 d. cannot be determined from the information given
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
A person wishes to accumulate P2,500 over a period of 15 yrs so that a cash payment can be made for a new roof on a summer cottage. To have this amount when it is needed, annual payments will be made into a savings account that earns 8% interest per year. How much must each annual payment be? Draw a cash flow diagram.
A business man must fund an account for him to pay the maintenance of the building after it shut down in 10 years. The costs until the business shutdown is part of the operating cost of the business while the maintenance costs starts in 10 years at 23,000 annually. Draw the cash flow diagram and solve on how much money should be deposited if the fund earns an interest of 12 percent?
Answer and draw neatly the necessary cash flow diagrams, and box your final answers. A man purchases a lot worth 1,000,000 if paid in cash. On installment basis, he paid P200,000 down payment, P300,000 at the end of the year, P400,000 at the end of the fourth year and the last payment at the end of the 5th year. If money is worth 16%, what is the worth of the last payment?
Mr.Andi is a manager at an automation company. As part of his future planning, Mr.Andi plan to manage an investment IDR 100 thousand in the first year and increase this amount is 10% annually. To solve this problem, you have to create a spreadsheet from the data provided to complete your calculations along with the cash flow. Based on the data given: (a) How long will Mr.Andi's account have value in the future of IDR 3,000,000 at a rate of return of 6% per annum? (b) If Mr.Andi counts up to the next 30 years, find the nominal amount in the next 10, 20, and 30 years that Mr. Andi will achieve. The calculation spreadsheet can describe the amount deposited annually.
An electrical engineer wants to deposit an amount P now such that she can withdraw an equal annual amount of A1 = $3000 per year for the first 5 years, starting 1 year after the deposit, and a different annual withdrawal of A2 = $4000 per year for the following 3 years. How would the cash flow diagram appear if i = 9% per year?
An entrepreneur would like to buy a piece of equipment for his business. The equipment cost $50,000 and will increase cash flow by $20,000 each year for 5 years. What is his IRR?
You just purchased a concrete mixing machine and wish to set aside enough money in a bank account to pay the maintenance on the car for the first five years. You have been told by the dealer to expect that maintenance cost of 120 OMR the first year and additional 30 OMR each year after. Whatsum of money must be deposited now in a bank account with an interest rate of 4 % compounded annually to cover the maintenance expense. Show a neat cash flow diagram showing the expenses.