Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 6.16E
To determine
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.
Annuity:
An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time.
To calculate: Determine the present value.
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5. What is the future value of a 5-year ordinary annuity with annual payments of P200, evaluated at a 7.5% semi-annual interest rate?
a. P1,161.68
b. P1,348.48
c. P3,828.34
d. P287.13
Use the table below to answer the following questions:
Present Value of an Annuity of 1
Future Value of an Annuity of 1
Period
4%
5%
8%
10%
4%
5%
8%
10%
4
3.6299
3.5460
3.3121
3.1699
4.2465
4.3101
4.5061
4.6410
5
4.4518
4.3295
3.9927
3.7908
5.4163
5.5256
5.8666
6.1051
6
5.2421
5.0757
4.6229
4.3553
6.6330
6.8019
7.3359
7.7156
7
6.0021
5.7864
5.2064
4.8684
7.8983
8.1420
8.9228
9.4872
8
6.7327
6.4632
5.7466
5.3349
9.2142
9.5491
10.6366
11.4359
9
7.4353
7.1078
6.2469
5.7590
10.5828
11.0266
12.4876
13.5795
10
8.1109
7.7217
6.7101
6.1446
12.0061
12.5779
14.4866
15.9374
11
8.7605
8.3064
7.1390
6.4951
13.4864
14.2068
16.6455
18.5312
Bobby gets a yearly alimony payment from his ex-wife and wants to saves enough to put a 15% down payment on a home in 4 years. Median…
Use the table below to answer the following questions:
Present Value of an Annuity of 1
Future Value of an Annuity of 1
Period
4%
5%
8%
10%
4%
5%
8%
10%
4
3.6299
3.5460
3.3121
3.1699
4.2465
4.3101
4.5061
4.6410
5
4.4518
4.3295
3.9927
3.7908
5.4163
5.5256
5.8666
6.1051
6
5.2421
5.0757
4.6229
4.3553
6.6330
6.8019
7.3359
7.7156
7
6.0021
5.7864
5.2064
4.8684
7.8983
8.1420
8.9228
9.4872
8
6.7327
6.4632
5.7466
5.3349
9.2142
9.5491
10.6366
11.4359
9
7.4353
7.1078
6.2469
5.7590
10.5828
11.0266
12.4876
13.5795
10
8.1109
7.7217
6.7101
6.1446
12.0061
12.5779
14.4866
15.9374
11
8.7605
8.3064
7.1390
6.4951
13.4864
14.2068
16.6455
18.5312
Bobby receives alimony payments every 6 months and the next payment is tomorrow. Median homes go for $950,000 and he wants to save $190,000 in 4 years. How much money should Bobby put away into an investment each time he receives alimony payments if he can get a 8% return a year?
Group of answer choices…
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
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