E9-20 (Algo) Determining an Educational Fund LO 9-7 Judge Drago has decided to set up an educational fund for his favorite granddaughter, Emma, who will start college in one year. The judge plans to deposit an amount in a savings account that pays 8 percent annual interest. He wants to deposit an amount that is sufficient to permit Emma to withdraw $20,400 for tuition starting in one year and continuing each year for a total of four years. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use the appropriate factor(s) from the tables provided. Required: How much should he deposit today to provide Emma with a fund to pay for her college tuition? Note: Round your answer to nearest whole dollar. Deposit amount

E9-20 (Algo) Determining an Educational Fund LO 9-7 Judge Drago has decided to set up an educational fund for his favorite granddaughter, Emma, who will start college in one year. The judge plans to deposit an amount in a savings account that pays 8 percent annual interest. He wants to deposit an amount that is sufficient to permit Emma to withdraw $20,400 for tuition starting in one year and continuing each year for a total of four years. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use the appropriate factor(s) from the tables provided. Required: How much should he deposit today to provide Emma with a fund to pay for her college tuition? Note: Round your answer to nearest whole dollar. Deposit amount

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 17P: Comprehensive The following are three independent situations: 1. K. Herrmann has decided to set up a...

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35 The City of Sandwich purchased a swimming pool from a privateoperator as of April 1, 2020, for $400,000, of which $200,000 wasprovided by a one-time contribution from the General Fund, and$200,000 was provided by a loan from the First National Bank, securedby a note. The loan has an annual interest rate of 6 percent, payablesemiannually on October 1 and April 1; principal payments of $100,000are to be made annually, beginning on April 1, 2021. The city has acalendar year as its fiscal year. During the year ended December 31,2020, the following transactions occurred related to the City ofSandwich Swimming Pool:1.The amounts were received from the City General Fund and the FirstNational Bank.2.A loan was provided in the amount of $125,000 from the Water UtilityFund to provide working capital.3.The purchase of the pool was recorded. Based on an appraisal, itwas decided to allocate $100,000 to the land, $200,000 toimprovements other than buildings (the pool), and $100,000 to…
Linda O’Shay deposited $50,000 in a savings account as a perpetual trust. She believes the account will earn 8% annual interest during the first 10 years and 4% interest thereafter. The trust is to provide a uniform end-of-year scholarship at the university. What uniform amount could be used for the student scholarship each year, beginning at the end of the first year and continuing forever?
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A small business owner has $57,485.03 set aside in a fund to be used for a project that will take 10 years. He plans to withdraw money from this fund at the end of each quarter. The fund earns annual 4.8% compounded quarterly. Unfortunately, the business owner faces difficulty dealing with the fund manager, who says that the money has to be locked in for 2 years (no withdrawals during that period). Thus, the start of the project will be deferred for 2 years, but still will take 10 years after that deferred time.How much can the business owner withdraw from this fund at the end of each quarter after the lock in period?
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PART A As a responsible corporate citizen, Carrium Insights Inc set up a college fund for under-privileged students in its community 10 years ago. Carrium deposited $2,500 monthly over the 10 year period in an account earning 6% compounded monthly; no withdrawals were allowed during this funding period. Required: (a) Compute the value of this college fund today, after 10 years’ worth of monthly deposits. (b) If Carrium deposits the value of this fund (answer in (a) above) into a new account earning 8% interest annually, how much would Carrium be able to withdraw at the beginning of each year over the next 10 years to assist qualifying students? (c) The CEO has indicated that he would like the fund to be set up with $500,000 instead of the current amount (answer from (a) above). How long will it take to accumulate $500,000 if Carrium deposits the amount from part (a) in the same account earning 8% interest annually? PART B The Accounting Manager is seeking to analyse the company’s…