Music producer, will receive royalties over a period of 3 years for the theme song she made for a TV program. The amount will be received at the end of each year as follows. Amount End of Year 1 R50 000 End of Year 2 R30 000 End of Year 3 R10 000 Find the present value (at the beginning of the first year) of all future royalties at a compound interest rate of 8% pa.

Music producer, will receive royalties over a period of 3 years for the theme song she made for a TV program. The amount will be received at the end of each year as follows. Amount End of Year 1 R50 000 End of Year 2 R30 000 End of Year 3 R10 000 Find the present value (at the beginning of the first year) of all future royalties at a compound interest rate of 8% pa.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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CLTV Section A company secured a contract that will result in income payments received of $280,000 today, $400,000 in 2 years and $600,000 in 5 years (these are single or lump sum payments they get). The expenses or outflows will include payments of $10,000 at the beginning of every month for 6 years and a one-time payment (expense) of $50,000 in one year from today. If the cost of money is 17% compounded annually, determine the Net Present Value (NPV) of the contract. a)What is the PV of the inflows? b) What is the PV of the outflows? c) What is the Net Present Value (NPV)?
Problem 10-27 (AICPA Adapted)On December 31, 2020, Ames Company leased equipment for 10 years. Theentity contracted to pay P 400, 000 annual rent on December 31, 2020 andon December 31 of each of the next time years.The lease liability was recorded at P 2, 700, 000 on December 31, 2020before the first payment.The equipment’s useful life is 12 years and the interest rate implicit in thelease is 10%.The entity used the straight line method to depreciate all equipment.1. In recording the December 31, 2021 payment by what amount shouldthe lease liability be reduced?a. 270, 000b. 230, 000c. 225, 000d. 170, 0002. What is the interest expense for 2021?a. 270, 000b. 230, 000c. 200, 000d. 03. What is the lease liability on December 31, 2021?a. 2, 700, 000b. 2, 300, 000c. 2, 130, 000
For numbers 8 to 10: Lukas Center acquired a new Laser Machine worth ₱580,000.00. Thecenter plans to pay 35% advance payment and the balance by quarterly payments for7 years. Money is worth 9% converted quarterly.8. How much is the balance that must be amortized every three months?A. ₱145,000.00B. ₱203,000.00C. ₱377,000.00D. ₱435,000.009. How many quarterly payments must be made to settle the obligation?A. 7B. 28C. 35D. 2110. Which of the following refers to the quarterly payments?A. ₱9,811.52B. ₱21,108.48C. ₱11,320.98D. ₱18,294.02
A3) Finance A property can be purchased in cash or through an equivalent plan, over 20 years, consisting of equal monthly payments (before monetary correction), at the effective rate of 8.60% per year. Monetary correction is made monthly, using the reference rate (RT). Throughout this period, the monthly average RT was 0.60%. Knowing that the twentieth installment was $2170 (after monetary correction), obtain the cash value of the property.
25 Vanderbilt Company is a dealer in machinery. On January 1, 2010 machinery was leased to another enterprise with the following provisions: Annual rental payable at the end of each year, 3,000,000Lease term and useful life of machinery, 5 yearsCost of machinery, 8,000,000Residual value-unguaranteed, 1,000,000Implicit interest rate, 12%PV of an ordinary annuity of 1 for 5 periods at 12% 3.60PV of 1 for 5 periods at 12% 0.57 At the end of the lease term on December 31, 2010, the machinery will revert to Vanderbilt. The perpetual inventory system is used. Vanderbilt incurred initial direct cost of P300,000 in finalizing the lease agreement.What is the total financial revenue from the lease? a. 4,630,000 b. 4,200,000 c. 5,200,000 d. 3,630,000
Question 5 Telephone Limited signed a contract with Machinery Leasing Company at 1st January 2020 to lease a machine. The agreement consists in 10 equal annual payments of $300,000 at the beginning of each year with an interest rate of 15%. The yearly rental payment includes $30,000 of executory costs related to insurance on the machine. The executory costs of $30,000 are paid to the lessor each year. There is an option to purchase the machine at the end of the lease term for $50,000. The machine has an estimated useful life of 14 years and a guaranteed residual value of $20,000. Both companies adopt straight-line depreciation method for all items of PPE. Consider a PVIF (n=10, i=15%) of 0.2472 and PVIFA (n=10, i=15%) of 5.0188. The balance day for Telephone Limited and Machinery Leasing Company is 31 of December. Required (Round all numbers to the nearest dollar) a) Discuss the nature of this lease to Telephone Limited. b) Discuss the nature of this lease to Machinery Leasing…
1. Lukas Center acquired a new Laser Machine worth ₱580,000.00. The center plans to pay 35% advance payment and the balance by quarterly payments for 7 years. Money is worth 9% converted quarterly. How much is the balance that must be amortized every three months?A. ₱145,000.00B. ₱203,000.00C. ₱377,000.00D. ₱435,000.00 How many quarterly payments must be made to settle the obligation?A. 7B. 28C. 35D. 21 Which of the following refers to the quarterly payments?A. ₱9,811.52B. ₱21,108.48C. ₱11,320.98D. ₱18,294.02 2. Eleven months after borrowing money, Dorah pays an interest of ₱2,800. How much did she borrow if the simple interest rate was 11 1/3 % ?A. ₱290.89B. ₱291.86C. ₱26,951.87D. ₱26,862.12 3. How long will it take for $7000 to double at the rate of 8%?A. 15.5yearsB. 21.5 yearsC. 9.5 yearsD. 12.5years 4. An initial investment of $480 earns interest for 7 years in an account that earns 13% interest, compounded quarterly. Find the amount of money in the account at the end of the 7…
Kk.131. Chico & Grace deposit $750 at the end of every three months for 7 years into an account earning 6.1% compounded quarterly. At the end of the 7 years the amount is left for a further 3 years at 4.7% compounded semi-annually. a. How much will they have at the end of this investment time? (10 years) b. How much interest was earned
34.ABC Corp received a three-year 10% P2,000,000 on January 1, 20X1. Principal and interest are due after 3 years, How much is the interest receivable at Dec 31, 20X2 200,000 400,000 600,000 2,000,000
The Problem 24-6 (IAA) Zephyr Company is provided a grant by a foreign governme for. the purpose of acquiring land for a building site grant is a zero-interest loan for 5 years evidenced hu promissory note. The loan was granted on January 1, 2020 for P8,000;000, The market rate of interest is 6%. The present value of 1 for fiv periods at 6% is .7473. Required: Prepare journal entries for 2020 and 2021.
Need in 10 mins 14. On January 1, 20x1, ABC sold a used vehicle with a historical cost of P2,000,0000 and accumulated depreciation of P700,000 in exchange for cash of P100,000 and a noninterest bearing note receivable of P1,000,000 due in 4 equal annual installments starting on December 31, 20x1 and every December 31, thereafter. The prevailing rate of interest for this type of note is 12%. On December 31, 20x2, the carrying amount of the note receivable is approximately (use 6-decimal present value factor)
Problem 21-02 b-f On January 1, 2020, Bridgeport Company contracts to lease equipment for 5 years, agreeing to make a payment of $145,088 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $605,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Bridgeport’s incremental borrowing rate is 6%, and the implicit rate in the lease is 10%, which is known by Bridgeport. Title to the equipment transfers to Bridgeport at the end of the lease. The asset has an estimated useful life of 5 years and no residual value. Prepare the journal entries that Bridgeport should record on January 1, 2020 Date Account Titles and Explanation Debit Credit January 1, 2020 enter an account title To record the lease enter a debit amount enter a credit amount enter an account title To record the lease…

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