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1.
Present value:
Present value refers to the present worth of the money that is received in future in a lump sum or as series of cash flows at a specified interest rate. When these future sums of money are discounted at a higher rate, the present value of the future cash flows gets lower.
Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:
To determine: The present value of the following options.
2.
The required fund balance after last payment is made on December 31, 2027.
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Chapter 6 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
- es QS B-7 (Algo) Future value of an annuity LO P4 Claire Fitch is planning to begin an individual retirement program in which she will invest $3,200 at the end of each year. Fitch plans to retire after making 30 annual investments in the program earning a return of 8%. What is the value of the program on the date of the last payment (30 years from the present)? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "FV of an Ordinary Annuity" to 4 decimal places and final answer to the nearest whole dollar.) Periodic Cash Flow X f (FV of an Ordinary Annuity) Future Valuearrow_forwardQUESTION 5 Katharine Bartle will receive an annuity of $4,090.00 every month for 23 years. How much is this cash flow worth to them today if the payments begin today? Assume a discount rate of 5.00%. Oa. $55,398.13 b. $2,119,880.47 c. $672,837.73 Od. $170,156.69arrow_forwardsubmit quiz Two partners agree to invest equal amounts in their business. One will contribute $10,000 immediately. The other plans to contribute an equivalent amount in 7 years. How much should she contribute at that time to match her partner's investment now, assuming an interest rate of 1% compounded semiannually? $(Type an integer or decimal rounded to two decimal places as needed.) WSO2 Identity Server Next F12 F10 Pause F11 Insert F8 F9 F5 F6 F7 PriSc F3 F4 F2 DI F1 Esc & 7. * 8 @ #3 2$ %3Darrow_forward
- 4G H 10:13 O O l 01:57:06 Remaining Multiple Choice T purchased a life annuity for P1,500,000 which will pay him P150,000 a year. What will T include in his gross income on the 11th year of the policy? P150,000 P1,350,000 P1,500,000 ZERO 39 of 60arrow_forwardChapter 10 Discussion Q2 A perpetuity will pay $900 per year, starting five years after the perpetuity is purchased. What is the present value (PV) at time 0, given that the interest rate is 11%? Show your steps. A) $2695 B) $4312 C) $5390 D) $3234arrow_forwardQUESTION 20 Which is more valuable, receiving $775 today or receiving $885 in 2.5 years if interest rates are 7.25 percent? O a. Need more information to make a determination O b. Receiving $775 today OC. They are worth the same amount O d. Receiving $885 2.5 yearsarrow_forward
- QUESTION 9 Norbert Chapa is saving for retirement by putting away $6,090.00 every day for 6 years. How much is this investment worth at the end of 6 years if payments begin today" Assume an interest rate of 1.00%. Oa. $35,295.42 b. $12,945,053.24 Oc. $13,745,519.33 O d. $37,466.80arrow_forwardA Moving to another question will save this response. Question 9 How much less is a perpetuity of $2,000 worth than an annuity due of the same amount for 30 payments (in $ dollars)? Assume an interest rate of 1096. $ A Moving to another question will save this response. search F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 Home Enc 41I & 5 6 8. W R Y D F G H J. Karrow_forwardExercise B-9 (Algo) Present value of an annuity LO P3 Dave Krug finances a new automobile by paying $6,100 cash and agreeing to make 10 monthly payments of $470 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Monthly Payment $ Table Values are Based on: Present Value of Loan 470 n W Table Factor Cash Down Payment Present Value of Loan Cost of the Automobilearrow_forward
- Calculate the principal portion of the second payment on the required on an amortized loan annual interest rate of 8.25% for 20 years. finance the purchase of a new home priced at $99,757.57 assuming the O A. $165.30 O B. $174.17 OC. $175.30 O D. $164.17 Click to select your answer. tUs /- MacBook Air 888 F4 14 F7 F1 F3 FS F6 II 4) F9 F10 F11 @ 2$ 4 23 & 2 6. 0. R Y P. S D F H. J K B alt command +arrow_forwardExercise B-9 (Algo) Present value of an annuity LO P3 Dave Krug finances a new automobile by paying $6,800 cash and agreeing to make 10 monthly payments of $500 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Monthly Payment Table Values are Based on: Present Value of Loan n i = = Table Factor Cash Down Payment = = Present Value of Loan Cost of the Automobilearrow_forwardExercise B-13 (Algo) Present value of an amount and of an annuity LO P1, P3 Compute the amount that can be borrowed under each of the following circumstances: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "Table value" to 4 decimal places.) 1. A promise to repay $98,000 three years from now at an interest rate of 7%. 2. An agreement to make three separate annual payments of $16,000, with the first payment occurring 1 year from now. The annual interest rate is 2%. Option 1 Loan amount Option 2 Annual payments Table Value Table Value Amount Amount $ Present Value Present Value 0 0arrow_forward
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