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Future value; annuities
• LO6–6
Wiseman Video plans to make four annual deposits of $2,000 each to a special building fund. The fund’s assets will be invested in mortgage instruments expected to pay interest at 12% on the fund’s balance. Using the appropriate annuity table, determine how much will be accumulated in the fund on December 31, 2021, under each of the following situations:
1. The first deposit is made on December 31, 2018, and interest is compounded annually.
2. The first deposit is made on December 31, 2017, and interest is compounded annually.
3. The first deposit is made on December 31, 2017, and interest is compounded quarterly.
4. The first deposit is made on December 31, 2017, interest is compounded annually, and interest earned is withdrawn at the end of each year.
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Chapter 6 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
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- Solve an annuity problem Question A deposit of $3,890 is placed into a scholarship fund at the beginning of every six months for 7 years. The fund earns 7% annual interest, compounded biannually, and paid at the end of the six months. How much is in the account right after the last deposit? (Round your answer to the nearest cent if necessary.) Sorry, that's incorrect. Try again? 4387.74arrow_forwardPresent Value of an Annuity Ralph Benke wants to make 8 equal semiannual withdrawals of $8,000 from a fund that will earn interest at 11% compounded semiannually. Required: How much would Ralph have to invest on: Round your answers to two decimal places. January 1, 2019, if the first withdrawal is made on July 1, 2019 $ fill in the blank 1 July 1, 2019, if the first withdrawal is made on July 1, 2019 $ fill in the blank 2 January 1, 2019, if the first withdrawal is made on January 1, 2022arrow_forwardQuestion 11 You deposit $5000 each year into your retirement account, starting in one year. If these funds earn an average of 5% per year over the 27 years until your retirement, what will be the value of your retirement account upon retirement? Your Answer: Answerarrow_forward
- Commencing January 1 2022 Narelle plans to deposit $500 at the beginning of each month into an investment fund. The first deposit will be made on January 1 2022. Narelle predicts that the rate of return on this fund will be j12=3.76% from 1 January 2022 to 30 June 2022 and 12-4.08% from 1 July 2022 to 31 December 2022. If we assume these deposits are made at regular intervals, what will the balance of this account be on 31 December 2022? a. 6126.45 b. 6131.38 c. 6111.42 d. 6068.98arrow_forwardCommencing January 1 2022 Narelle plans to deposit $500 at the beginning of each month into an investment fund. The first deposit will be made on January 1 2022. Narelle predicts that the rate of return on this fund will be j12=2.62% from 1 January 2022 to 30 June 2022 and j12=5.44% from 1 July 2022 to 31 December 2022. If we assume these deposits are made at regular intervals, what will the balance of this account be on 31 December 2022?arrow_forward17 a.Use the appropriate formula to determine the periodic deposit. b.How much of the financial goal comes from deposits and how much comes from interest? Periodic Deposit Rate Time Financial Goal $? at the end of each month 7.25% compounded monthly 40 years $1,250,000 See the formulas and check what is the best one to use for this problem. a.The periodic deposit is$________. (Do not round until the final answer. Then round up to the nearest dollar as needed.) b. $_______ of the $1,250,000 comes from deposits and $_________ comes from interest. (Use the answer from part (a) to find these answers. Round to the nearest dollar as needed.)arrow_forward
- Question 14 Suppose for an annuity due, you want to have $30,000 in the bank after 20 years. Assuming you make deposits at the beginning of each year at an interest rate of 4%, how much would you have to deposit at the start of each year, assuming that each deposit is the same amount? A) s968.70 B $816.22 $625.00 $737.24arrow_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_forwardQuestion content area top Part 1 (Future value of a complex annuity) Springfield mogul Montgomery Burns, age 85, wants to retire at age 100 so he can steal candy from babies full time. Once Mr. Burns retires, he wants to withdraw $0.9 billion at the beginning of each year for 8 years from a special offshore account that will pay 28 percent annually. In order to fund his retirement, Mr. Burns will make 15 equal end-of-the-year deposits in this same special account that will pay 28 percent annually. How much money will Mr. Burns need at age 100, and how large of an annual deposit must he make to fund this retirement account? Question content area bottom Part 1 a. If the retirement account will pay 28 percent annually, how much money will Mr. Burns need when he retires? $enter your response here billion (Round to three decimal places.) Part 2 b. How large of an annual deposit must he make to fund this retirement account? $enter your response here…arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
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