Del Monty will receive the following payments at the end of the next three years: $20,000, $23,000, and $25,000. Then from the end of the 4th year through the end of the 10th year, he will receive an annuity of $26,000 per year. At a discount rate of 10 percent, what is the present value of all three future benefits? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value of all future benefits

Del Monty will receive the following payments at the end of the next three years: $20,000, $23,000, and $25,000. Then from the end of the 4th year through the end of the 10th year, he will receive an annuity of $26,000 per year. At a discount rate of 10 percent, what is the present value of all three future benefits? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value of all future benefits

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

See similar textbooks

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Hassan will receive the following payments at the end of the next four years: AED 50,000, AED 60,000, AED 75,000 and 80,000. Then from the end of the fourth year through the end of the ninth year, he will receive an annuity of AED 75,000. At a discount rate of 5 percent, what is the present value of all future benefits?
Hamad will receive the following payments at the end of the next three years: AED 40,000, AED 50,000, and AED 65,000. Then from the end of the thrid year through the end of the tenth year, he will receive an annuity of AED 30,000. At a discount rate of 6 percent, what is the present value of all future cash flows?
Bridget Jones has a contract in which she will receive the following payments for the next five years: $11,000, $12,000, $13,000, $14,000, and $15,000. She will then receive an annuity of $17,000 a year from the end of the 6th through the end of the 15th year. The appropriate discount rate is 11 percent. a. What is the present value of all future payments? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
You wish to retire after 22 years; at which time you want to have accumulated enough money to receive an annuity of $68,000 a year for 25 years of retirement. During the period before retirement, you can earn 6 percent annually, while after retirement you can earn 4 percent on your money. What annual contribution to the retirement fund will allow you to receive the $68,000 annually?
Quokka recently won the lottery and has the opportunity to receive $200,000 per year at the end of the year for the next 20 years. Assuming an annual interest rate of 5% is appropriate, the future value is 2.65330 × $200,000 = $530,660, the present value of an ordinary annuity is 12.46221 × $200,000 = $2,492,442, and the present value of an annuity due is 13.08532 × $200,000 = $2,617,064. What is the fair value of the lottery payments according to GAAP? a. $530,660 b. $2,492,442 c. $2,617,064 d. $4,000,000
Ms. Cristiana Piccini is valuing an investment that pays her $27,000 per year for the first ten years, $35,000 per year for the next ten years, and $48,000 per year the following ten years (all payments are at the end of each year). If the appropriate annual discount rate is 9 percent, what is the value of the investment to Ms. Cristiana Piccini today?
Jane has been offered a choice between a lump sum payment of $100,000 today or an annuity thatpays $8,000 per year for 20 years, starting one year from today. If the interest rate is 6% per year,which option should she choose?
Bill is the owner of an ordinary annuity that will pay him $12,000 at the end of each of the next three years. This annuity has an annual rate of return of 7%. Given this information, what is the present value today of this annuity?
Claire Fitch is planning to begin an individual retirement program in which she will invest $2.200 at the end of each year. Fitch plans to retire after making 30 annual investments in the program earning a return of 10%. What is the value of the program on the date of the last payment (30 years from the present)? (PV of $1. EV of $1, PVA of $1. and EVA of 5) (Use appropriate factor(s) from the tables provided. Round your "FV of an Ordinary Annuity" to 4 decimal places and final answer to the nearest whole dollar)
Claire Fitch is planning to begin an individual retirement program in which she will invest $1,500 at the end of each year. Fitch plans to retire after making 30 annual investments in the program earning a return of 10%. What is the value of the program on the date of the last payment (30 years from the present)?
As a settlement for an insurance claim, Craig was offered one of two choices. He could either accept a lump-sum amount of $11,235 now, or accept monthly payments of $140 for the next nine years. If the money is placed into a trust fund earning 7.64% compounded annually, which is the better option and by how much?