Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 6.10BE
To determine
Deferred annuity:
A deferred annuity refers to the annuity which does not make payments immediately. It is a type of annuity contract which makes either monthly contribution to the account over time or leave their money in the account with a belief that it will grow.
Present Value:
The value of today’s amount to be paid or received in the future at a compound interest rate is called as present value. The following formula is used to calculate the present value of an amount:
To determine: The amount that Company C borrowed assuming that the first of the five annual $10,000 payments was not due for three years.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Q. No. 02: Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities.$300 per year for 10 years at 10%$100 per year for 5 years at 5%$300 per year for 5 years at 0%Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.
TP5. LO 9.5 You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020.
When would you recognize revenue for this payment?
What method of accounting would you use for this construction project and why?
What would be the benefits and challenges with your method selection?
Give an example of your distribution selection and associated costs of the project (you may estimate based on other industry competitors).
What might be some benefits and challenges associated with the other method of construction revenue recognition?
Question 15
Consider a policy with a R5000 straight deductible. Determine the amount that the insurer would pay for a loss of R12 000.
1 R7 000
2 R5 000
3 R12 000
4 The insurer will not be liable for any payment.
Chapter 6 Solutions
Intermediate Accounting
Ch. 6 - Prob. 6.1QCh. 6 - Explain compound interest.Ch. 6 - Prob. 6.3QCh. 6 - Prob. 6.4QCh. 6 - Prob. 6.5QCh. 6 - Prob. 6.6QCh. 6 - What is an annuity?Ch. 6 - Explain the difference between an ordinary annuity...Ch. 6 - Prob. 6.9QCh. 6 - Prepare a time diagram for the present value of a...
Ch. 6 - Prepare a time diagram for the present value of a...Ch. 6 - What is a deferred annuity?Ch. 6 - Assume that you borrowed 500 from a friend and...Ch. 6 - Compute the required annual payment in Question...Ch. 6 - Explain how the time value of money concept is...Ch. 6 - Prob. 6.1BECh. 6 - Prob. 6.2BECh. 6 - Prob. 6.3BECh. 6 - Present value; single amount LO63 John has an...Ch. 6 - Present value; solving for unknown; single amount ...Ch. 6 - Future value; ordinary annuity LO66 Leslie...Ch. 6 - Future value; annuity due LO66 Refer to the...Ch. 6 - Prob. 6.8BECh. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - Solve for unknown; annuity LO68 Kingsley Toyota...Ch. 6 - Price of a bond LO69 On December 31, 2018,...Ch. 6 - Lease payment LO69 On September 30, 2018,...Ch. 6 - Prob. 6.1ECh. 6 - Future value; single amounts LO62 Determine the...Ch. 6 - Prob. 6.3ECh. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Solving for unknowns; single amounts LO64 For...Ch. 6 - Future value; annuities LO66 Wiseman Video plans...Ch. 6 - Prob. 6.8ECh. 6 - Solving for unknowns; annuities LO68 For each of...Ch. 6 - Prob. 6.10ECh. 6 - Prob. 6.11ECh. 6 - Deferred annuities LO67 Required: Calculate the...Ch. 6 - Prob. 6.13ECh. 6 - Prob. 6.14ECh. 6 - Solving for unknown annuity amount LO68 Required:...Ch. 6 - Prob. 6.16ECh. 6 - Price of a bond LO69 On September 30, 2018, the...Ch. 6 - Price of a bond; interest expense LO69 On June...Ch. 6 - Lease payments LO69 On June 30, 2018,...Ch. 6 - Lease payments; solve for unknown interest rate ...Ch. 6 - Prob. 6.21ECh. 6 - Analysis of alternatives LO63, LO67 Esquire...Ch. 6 - Prob. 6.2PCh. 6 - Analysis of alternatives LO63, LO67 Harding...Ch. 6 - Investment analysis LO63, LO67 John Wiggins is...Ch. 6 - Prob. 6.5PCh. 6 - Prob. 6.6PCh. 6 - Prob. 6.7PCh. 6 - Deferred annuities LO67 On January 1, 2018, the...Ch. 6 - Prob. 6.9PCh. 6 - Noninterest-bearing note; annuity and lump-sum...Ch. 6 - Solving for unknown lease payment LO68, LO69...Ch. 6 - Solving for unknown lease payment; compounding...Ch. 6 - Lease v s. buy alternatives LO63, LO67, LO69...Ch. 6 - Prob. 6.14PCh. 6 - Prob. 6.15PCh. 6 - Prob. 6.1BYPCh. 6 - Prob. 6.2BYPCh. 6 - Prob. 6.3BYPCh. 6 - Prob. 6.4BYPCh. 6 - Judgment Case 65 Replacement decision LO63, LO67...Ch. 6 - Prob. 6.6BYPCh. 6 - Prob. 6.7BYP
Knowledge Booster
Similar questions
- Question 11 Consider a policy with a R10 000 deductible and a recapture factor of 5%. Determine the amount of the deductible the insured would pay for a loss of R45 000. 1 R 8 250 2 R 2 250 3 R36 750 4 R10 000arrow_forwardProblem 5-22 Perpetuities (LO3) A local bank advertises the following deal: "Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." a. Calculate the present value of your payments to the bank if the interest rate is 8.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of a $100 perpetuity deferred for 10 years if the interest rate is 8.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forward2.166. Mrs. Eve put 10 OOO PLN on a deposit. The annual interest rate on the deposit is equal to 8%, and interest is capitalized every quarter. Calculate the amount that Mrs. Eve will have on the deposit:(a) after 9 months (b) after one and a half years (c) after three years of saving.Ignore tax on capital gains.arrow_forward
- Q 24 Consider a $4,400 deposit earning 9 percent interest per year for 9 years. What is the future value? (Do not round intermediate calculations. Round your answer to 2 decimal places.) FUTURE VALUE? How much total interest is earned on the original deposit? (Do not round intermediate calculations. Round your answer to 2 decimal places.) TOTAL INTEREST EARNED? How much is interest earned on interest? (Do not round intermediate calculations. Round your answer to 2 decimal places.) INTEREST EARNED ON THE INTEREST?arrow_forwardPresent value of an Annuity of $1 in Arrears Periods 4% 6% 8% 10% 12% 14% 1 0.962 0.943 0.926 0.909 0.893 0.877 2 1.886 1.833 1.783 1.736 1.690 1.647 3 2.775 2.673 2.577 2.487 2.402 2.322 4 3.630 3.465 3.312 3.170 3.037 2.914 5 4.452 4.212 3.993 3.791 3.605 3.433 6 5.242 4.917 4.623 4.355 4.111 3.889 7 6.002 5.582 5.206 4.868 4.564 4.288 8 6.733 6.210 5.747 5.335 4.968 4.639 9 7.435 6.802 6.247 5.759 5.328 4.946 10 8.111 7.360 6.710 6.145 5.650 5.216 Lucas Company is considering a project with an initial investment of $530,250 in new equipment that will yield annual net cash flows of $95,000, and will be depreciated at $75,750 per year over its seven year life. What is the internal rate of return? a.6% b.14% c.10% d.12% e.8%arrow_forwardq 10 Compute the present value of an $1,200 payment made in 9 years when the discount rate is 11 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) present value?arrow_forward
- Q.6. (a) The Rose Garden company will maintain a garden plot for you for a payment of OMR 75 now, followed by annual payments, in perpetuity, of OMR 50. How much would you have to put into an account which was to make these payments if the account guaranteed an interest rate of 10 per cent? Q.6. (b) What is the difference between annuity and perpetuity?arrow_forward(Ch 11 #9) There is a loan obligation to pay $1000 one year from today and another $1000 two years from today. Assuming the annual effective rate of interest is 10%, find the following: a) Macaulay duration of the loan. b) Modified duration of the loan. c) Convexity of the loan.arrow_forwardProblem 5-6 Present Value of an Annuity Due (LG5-6)If the present value of an ordinary, 6-year annuity is $5, 600 and interest rates are 7.5 percent, whats the present value of the same annuity due?Note: Round your percentage answer to 2 decimal places (i. e.. 0.1234 should be entered as 12.34).arrow_forward
- Q 34 What is the future value of a $830 annuity payment over six years if interest rates are 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.) FUTURE VALUE?arrow_forwardQ 40 What's the present value of a $610 annuity payment over six years if interest rates are 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.) PRESENT VALUE?arrow_forwardQ6. You plan to deposit P100 into a savings account at the end of each month for the next 5 years.a.) At 3% compounded monthly, how much will you have accumulated at the end of 5 years?b.) How much difference would it make if the payments were made at the beginning of the monthrather than at the end? Answer: a.) F = P6,464.67, b.) F value difference = P196.63 please show clear solution, the answer has already been given. (although if its wrong please write the answer and solution anyway)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education