Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134067254
Author: Braun
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 12.43BE
1.
To determine
The amount of money does H need now to fund her travels.
2.
To determine
The amount of money H needs now to fund her travels at the interest rate of 4% for 6 years.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please show in excel 2. Suppose another graduating student also has a financial plan with regard to starting his business. He intends to borrow $25,000 from his family and friends at the end of this year to start his business. He believes his business will earn $5000 after expenses one year after it begins, another $7000 after expenses the following year, $10,000 after expenses in each of the next , two years, and $3000 in the last year before it closes. Using a 4% annual interest discount rate, determine the net present value of this investment.
3. You have just received an email inviting you to accept a new credit card that offers you a $12,000 credit limit based upon your FICO score. You realize you can use that card now to charge your long overdue upscale vacation, which will cost $7500. The introductory terms of your new card indicates that no payment is due for the next two years, and the amount due will be charged a low 3% every month until you repay. Assuming you wait the full…
(c) As part their responsible business initiative, Micron Industries wants to establish a trust fund to assist under-privileged students in their local community in pursuing 4-year undergraduate degree programs. The tuition fee is estimated to be $35,000 for the first year but is expected to increase by 5% per year thereafter.
Required:i. Assuming this trust fund will earn 7.5% interest per annun, calculate the amount required at the start of one student’s college journey to fund his/her full tuition.
ii. If Micron Industries would like to sponsor the first student in two years’ time and they currently have $125,000 earmarked for investment, what annual rate of interest is required to accumulate the amount needed as calculated in part (i)?
Mary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image).
Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the present value factor you will use for cash inflows that come JUST in year 6? Enter your answer to three decimals.
Chapter 12 Solutions
Managerial Accounting (5th Edition)
Ch. 12 - Prob. 1QCCh. 12 - (Learning Objective 2) After identifying potential...Ch. 12 - Prob. 3QCCh. 12 - Prob. 4QCCh. 12 - Prob. 5QCCh. 12 - Prob. 6QCCh. 12 - Prob. 7QCCh. 12 - Prob. 8QCCh. 12 - Prob. 9QCCh. 12 - (Learning Objective 5) Which of the following...
Ch. 12 - Order the capital budgeting process (Learning...Ch. 12 - Prob. 12.2SECh. 12 - Prob. 12.3SECh. 12 - Prob. 12.4SECh. 12 - Prob. 12.5SECh. 12 - Prob. 12.6SECh. 12 - Prob. 12.7SECh. 12 - Prob. 12.8SECh. 12 - Prob. 12.9SECh. 12 - Prob. 12.10SECh. 12 - Prob. 12.11SECh. 12 - Prob. 12.12SECh. 12 - Prob. 12.13SECh. 12 - Prob. 12.14SECh. 12 - Prob. 12.15SECh. 12 - Identify ethical standards violated (Learning...Ch. 12 - Prob. 12.17AECh. 12 - Compute payback period and analyze changes...Ch. 12 - Prob. 12.19AECh. 12 - Prob. 12.20AECh. 12 - Prob. 12.21AECh. 12 - Prob. 12.22AECh. 12 - Calculate the payback and NPV for a sustainable...Ch. 12 - Prob. 12.24AECh. 12 - Prob. 12.25AECh. 12 - Prob. 12.26AECh. 12 - Prob. 12.27AECh. 12 - Prob. 12.28AECh. 12 - Prob. 12.29AECh. 12 - Prob. 12.30AECh. 12 - Prob. 12.31AECh. 12 - Prob. 12.32AECh. 12 - Prob. 12.33AECh. 12 - Prob. 12.34AECh. 12 - Prob. 12.35AECh. 12 - Prob. 12.36BECh. 12 - Prob. 12.37BECh. 12 - Prob. 12.38BECh. 12 - Prob. 12.39BECh. 12 - Prob. 12.40BECh. 12 - Prob. 12.41BECh. 12 - Prob. 12.42BECh. 12 - Prob. 12.43BECh. 12 - Prob. 12.44BECh. 12 - Prob. 12.45BECh. 12 - Prob. 12.46BECh. 12 - Prob. 12.47BECh. 12 - Prob. 12.48BECh. 12 - Prob. 12.49BECh. 12 - Prob. 12.50BECh. 12 - Prob. 12.51BECh. 12 - Prob. 12.52BECh. 12 - Prob. 12.53BECh. 12 - Prob. 12.54BECh. 12 - Prob. 12.55APCh. 12 - Prob. 12.56APCh. 12 - Prob. 12.57APCh. 12 - Prob. 12.58APCh. 12 - Prob. 12.59BPCh. 12 - Prob. 12.60BPCh. 12 - Evaluate an investment using all four methods...Ch. 12 - Prob. 12.62BPCh. 12 - Prob. 12.63SCCh. 12 - Discussion Questions 1. Describe the capital...Ch. 12 - Prob. 12.65ACTCh. 12 - Prob. 12.66ACTCh. 12 - Prob. 12.67ACT
Knowledge Booster
Similar questions
- Answer and draw neatly the necessary cash flow diagrams, and box your final answers. A student plans to deposit P1,500 in a bank now and another P3,000 for the next two years. If he plans to withdraw P5,000 three years after his deposit for the purpose of buying shoes. What will be the amount of money left in the bank one year after his withdrawal? Effective rate is 10%.arrow_forwardTopic: Basic Financial Management How to answer these using formulas in finance? Nathan and Stephanie are saving for their daughter's college education. Their daughter, Paige, is now 8 years old and will be entering college 10 years from now (t = 10). College tuition and expenses at State U. are currently $16,000 a year and are expected to increase at a rate of 4% a year. They expect Paige to graduate in 4 years (if Paige wants to go to graduate school, she's on her own). Tuition and other costs will be due at the beginning of each school year (at t = 10, 11, 12, and 13). So far, Nathan and Stephanie have built up $9,000 in the college savings account. Their long-run financial plan is to contribute $3,000 a year at the beginning of each of the next five years (at t = 0, 1, 2, 3, and 4). Then they plan to make 6 equal annual contributions at the end of each of the following 6 years (t = 5, 6, 7, 8, 9, and 10). Their investment account is expected to earn 8%. How large must the annual…arrow_forwardMary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image). Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the total cash inflow that comes JUST in year 6? Do not include the annual cash flows from the earlier problem.arrow_forward
- Mary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image). Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the total cash outflow needed at the beginning of the project.arrow_forwardAnswer and draw the cash flow diagram A man invests P 20,000 now for college education of his 2 year old son. If the fund earns 10% effective, how much will the son get each year starting from his 18th to 22nd birthday.arrow_forwardAfter completing successfully your FIN203 course, you have been asked by many of your family and friends about financial matters. You are trying your best to advise them. a) Your grandmother has been asked to invest in a product that offers to double her money in 3 years. Indicate the annual rate of return she is being offered b) Your parents have $5,000.00 to deposit. Alpha Bank offers 2 percent per year compounded monthly. Bravo Bank offers 2 percent compounded annually. Compute the amount of deposit after being kept 10 years at each bank. Explain the difference between the two (2) future values. c) Your best friend is saving $1,800.00 and will earn 0.17 percent per month. Determine the number of months until the account grows to $2,000.00. d) Your cousin plans to expand his business and will require $100,000.00 in 6.5 years. The rate of return will be 0.70 percent per month for the first two years. It will go up to 1.00 percent for the rest of the period. Compute the $ amount to set…arrow_forward
- A third-year college friend of yours opened Mike’s Bike Repair Shop when he was a freshmen working on a sociology degree. He shared his NCF figures for the 3 years, including the $17,000 amount that it took to get started in business. (a) Determine the number of possible rate of return values. (b) Find all i* values between −50% and 110% by plotting PW versus i* for your friend. (Use 20% increments.) Year Net Cash Flow, $ 0 −17,000 1 20,000 2 −5,000 3 8000arrow_forwardMary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image). Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the present value factor you will use for the net annual cash flows? Enter your answer in three decimals.arrow_forwardCecilia wants to pay for her daughter's college for four years by banking 20,000 dollars per year. Her savings account will pay with an effective rate of 5 percent per year. The first annual payment for the tuition and room lodging is made during her 18th birthday. How much money should she deposit on the second birthday of her daughter so she can withdraw 20,000 dollars per year for 4 years that starts on her 18th birthday? First draw the cash flow diagram and solve the problemarrow_forward
- ENGINEERING ECONOMY UPVOTE WILL BE GIVEN. PLEASE WRITE THE COMPLETE SOLUTIONS LEGIBLE. FOLLOW THE INSTRUCTIONS CAREFULLY. Draw CASH FLOW DIAGRAMS for the GIVEN AND REQUIRED/FIND. Begins the solutions by writing the equations/formulas. Use 2 decimal places and Box the final answer. The father of a Junior High School Student wants to make sure that his son will be able to enroll and finish an engineering course after high school. To secure the future of his son, he plans to make deposits of P50,000 in a bank account every quarter for 5 years. The deposits will be made at the start of the periods. How much money can his son withdraw by the end of the 6th year if the money earns an interest of 10% compounded semi-annually?arrow_forwardPlease read the scenario below and asnwer the questions that follows. Please show clear working and answers thank you. Stephanie Carter has been gifted a sum of $50,000 by her grandparents on completing her graduation successfully. She is a fresh finance graduate and is excited to invest some money in the capital market, for which she intends to use the gifted sum of $50,000. However, instead of committing this money to the market immediately, she decides to wait for some time, work in the field and acquire some experience before proceeding with her intended investment. She thus contemplates an extremely conservative investment in a portfolio of stocks and bonds, at the start of year 5 from now. For now, she will leave the $50,000 in a fixed deposit with the bank which promises an interest rate of 6% per annum. She will require a return of at least 9% on her stock investments and 4% on bond investments. Stephanie would have to pay 25% taxes on any interest income. Dividends will be…arrow_forwardMarsiah Crunch plans to deposit cash in her saving account each year as shown below. Her saving effort would be useful as preparation for her son’s education. Year Deposit (RM) 0 1000 1 2000 2 2000 3 2000 4 3000 5 3000 6 3000 (a) Draw a cash flow diagram. (b) Estimate the future worth (FW) at the end of the 10th year based on the investment rate of 8% per annum.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
