USING PRESENT WORTH ANALYSIS AND SHOWING ALL STEPS PARTI A middle age couple has made an agreement with Landscape Forever Company, a gravesite landscaping and maintenance firm. The agreement states that the company will provide "deluxe" maintenance for the couples selected gravesite forever for an annual fee of $1000. To arrange payment the couple has set up a variable rate perpetual trust fund with their bank. The bank guarantees that the trust fund will earn a minimum of 5% per year. Assume that the services of Landscape Forever will not be needed until one of them die, and that they live until the age of 100. What is the minimum amount of money that the couple would have to deposit into the trust fund (ANSWER PART I is 20000 (P/F, 5%, 49) PART II Suppose that the couple made this minimum deposit at the age of 50, and suppose that the that interest rate changes as follows. Age 50 - 54 5% Age 55-64 10% Age 65-74 15% Age 75 - 84 20% What is the largest sum of money they can withdraw at age 84 and still have money for the landscape?

USING PRESENT WORTH ANALYSIS AND SHOWING ALL STEPS PARTI A middle age couple has made an agreement with Landscape Forever Company, a gravesite landscaping and maintenance firm. The agreement states that the company will provide "deluxe" maintenance for the couples selected gravesite forever for an annual fee of $1000. To arrange payment the couple has set up a variable rate perpetual trust fund with their bank. The bank guarantees that the trust fund will earn a minimum of 5% per year. Assume that the services of Landscape Forever will not be needed until one of them die, and that they live until the age of 100. What is the minimum amount of money that the couple would have to deposit into the trust fund (ANSWER PART I is 20000 (P/F, 5%, 49) PART II Suppose that the couple made this minimum deposit at the age of 50, and suppose that the that interest rate changes as follows. Age 50 - 54 5% Age 55-64 10% Age 65-74 15% Age 75 - 84 20% What is the largest sum of money they can withdraw at age 84 and still have money for the landscape?

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.12AMCP

See similar textbooks

Similar questions

Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.
Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friends trust fund payments. For further instructions on present value in Excel, see Appendix C.
Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friends trust fund payments. For further instructions on future value in Excel, see Appendix C.
Provide manual solutions for below mentioned problems. A social worker deposits a uniform amount of P12,000 at the end of each year in order to get a lump sum of money by the time she will retire at the end of 20 years. If the compound amount factor for this annuity is equal to 36.78559. 1. Compute the nominal interest rate.2. Determine how much will she receive at the end of 20 years.3. Determine the worth of the sinking fund factor in this fund invested. Answer. 1. 6% 2. P441,427.08 3. 0.027184557
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?