GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 9, Problem 9.13E
Computing Four Present Value Problems
On January 1 of this year. Shannon Company completed the following transactions (assume a 10% annual interest rate):
- a. Bought a delivery truck and agreed to pay $60,000 at the end of three years.
- b. Rented an office building and was given the option of paying $10,000 at the end of each of the next three years or paying $28,000 immediately.
- c. Established a savings account by depositing a single amount that will increase to $90,000 at the end of seven years.
- d. Decided to deposit a single sum in the bank that will provide 10 equal annual year-end payments of $40,000 to a retired employee (payments starting December 31 of this year).
Required (show computations and round to the nearest dollar):
- 1. In (a), what is the cost of the truck that should be recorded at the time of purchase?
- 2. In (b), which option for the office building results in the lowest present value?
- 3. In (c), what single amount must be deposited in this account on January 1 of this year?
- 4. In (d), what single sum must be deposited in the bank on January 1 of this year?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
How much cash must be deposited in a savings account (as a single amount) in order to accumulate $50,000 at the end of 12 years, assuming that the account will earn 12% interest?
Assume that a machine was purchased for $55,900. Cash of $15,300 was paid, and a four-year, 12% note payable was signed for the balance.
Prepare the horizontal model and record the journal entry, to show the purchase of the machine as described.
How much is the equal annual payment of principal and interest due at the end of each year?
What is the total amount of interest expense that will be reported over the life of the note?
Prepare the horizontal model and record the journal entries, to show the equal annual payments of principal and interest due at the end of each year.
A customer has a balance of $4,000 to be invested in a savings account with 5% interest per year.
A. Calculate the Future Value in the account in the 2nd year, 6th year and 10th year?
B. From the results found in question A, calculate the amount of interest earned on:
first two years (years 1 to 2)the next four years (years 3 to 6)past four years (years 7 to 10)
C. From the results obtained in question B, why does the amount of interest earned increase in each subsequent period?
Person A deposits $ 1,000 in a bank account at the beginning of each year for 15 years. If the investment of person A is evaluated with an effective interest rate of 4% per annum for the first 5 years, 5% per annum for the second 5 years and 6% per annum in the third 5 years, calculate the accumulated value at the end of 15 years.
Thanks
Chapter 9 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Define deferred revenue. Why is it a liability?Ch. 9 - Prob. 9QCh. 9 - Define working capital. How is working capital...
Ch. 9 - Prob. 11QCh. 9 - When a company signs a capital lease, does it...Ch. 9 - Prob. 13QCh. 9 - Define annuity.Ch. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - What is the present value factor for an annuity of...Ch. 9 - The university golf team needs to buy a car to...Ch. 9 - Which of the following best describes accrued...Ch. 9 - Prob. 4MCQCh. 9 - A company is facing a lawsuit from a customer. It...Ch. 9 - Which of the following transactions would usually...Ch. 9 - How is working capital calculated? a. Current...Ch. 9 - Prob. 8MCQCh. 9 - SmallFish Company borrowed 100,000 at 8% interest...Ch. 9 - Prob. 10MCQCh. 9 - Prob. 9.1MECh. 9 - Computing and Interpreting Accounts Payable...Ch. 9 - Prob. 9.3MECh. 9 - Prob. 9.4MECh. 9 - Prob. 9.5MECh. 9 - Prob. 9.6MECh. 9 - Prob. 9.7MECh. 9 - Prob. 9.8MECh. 9 - Prob. 9.9MECh. 9 - Computing the Present Value of an Annuity What is...Ch. 9 - Prob. 9.11MECh. 9 - Prob. 9.12MECh. 9 - Prob. 9.1ECh. 9 - Recording Payroll Costs Paul Company completed the...Ch. 9 - Prob. 9.3ECh. 9 - Recording a Note Payable through Its Time to...Ch. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Prob. 9.8ECh. 9 - Reporting Contingent Liabilities Jones Soda is a...Ch. 9 - Prob. 9.10ECh. 9 - Prob. 9.11ECh. 9 - Prob. 9.12ECh. 9 - Computing Four Present Value Problems On January 1...Ch. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.18ECh. 9 - Prob. 9.19ECh. 9 - Prob. 9.20ECh. 9 - Prob. 9.21ECh. 9 - Prob. 9.22ECh. 9 - Prob. 9.23ECh. 9 - Prob. 9.24ECh. 9 - Recording and Reporting Current Liabilities LO9-1...Ch. 9 - Prob. 9.2PCh. 9 - Prob. 9.3PCh. 9 - Recording and Reporting Accrued Liabilities and...Ch. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Prob. 9.7PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Prob. 9.10PCh. 9 - Prob. 9.11PCh. 9 - Prob. 9.12PCh. 9 - Prob. 9.13PCh. 9 - Prob. 9.14PCh. 9 - ALTERNATE PROBLEMS AP9-1 Recording and Reporting...Ch. 9 - Prob. 9.2APCh. 9 - Prob. 9.3APCh. 9 - Prob. 9.4APCh. 9 - Prob. 9.5APCh. 9 - Prob. 9.6APCh. 9 - Prob. 9.7APCh. 9 - Prob. 9.8APCh. 9 - Prob. 9.1CONCh. 9 - Annual Report Cases Finding Financial Information...Ch. 9 - Finding Financial Information Refer to the...Ch. 9 - Prob. 9.3CPCh. 9 - Prob. 9.4CPCh. 9 - Prob. 9.5CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- You opened an account with an investment of $1,000 10 years ago. The ending balance in the account is $1,500. Given annual compounding, what interest rate was earned on the account?arrow_forward$600.00 was invested in a bank for 5 years. When the deposit was made, the bank was paying the 14% capitalizable each quarter. Three and a half years later, the rate changed to 12.2% capitalizable each month. Calculate the amount at the end of the five years.arrow_forwardSuppose that you deposit $7000 in a savings account that pays 4% annual interest, with interest credited to the account at the end of each year. Assuming that no withdrawals are made, complete the following: a. Find the balance in the account after 5 years. b. Find the balance of the account after 9 years and 10 months.arrow_forward
- An engineer deposits $1,000 in a savings account. Four years after the deposit, half of the account balance was withdrawn. $2,000 is deposited annually for an 8-year period, with the first deposit occurring 2 years after the withdrawal. The total balance was withdrawn 15 years after the initial deposit. If the account earned interest of 8% compounded annually over the 15-year period, how much was withdrawn at each withdrawal point?arrow_forwardSampson Company just purchased a piece of equipment with a value of $53,300. Sampson financed this purchase with a loan from the bank and must make annual loan payments of $13,000 at the end of each year for the next five years. Interest is compounded annually on the loan. What is the interest rate on the bank loan? Round your answer to the nearest whole number.fill in the blank 1 % 2. Simon Company needs to accumulate $200,000 to repay bonds due in six years. Simon estimates it can save $13,300 at the end of each semiannual period at a local bank offering an annual interest rate of 8% compounded semiannually. Calculate the amount accumulated at the end of six years. Round your answer to the nearest whole dollar.$fill in the blank 2 Will Simon have enough money saved at the end of six years to repay the bonds?arrow_forwardSuppose an individual makes an initial investment of $2,400 in an account that earns 6.6%, compounded monthly, and makes additional contributions of $100 at the end of each month for a period of 12 years. After these 12 years, this individual wants to make withdrawals at the end of each month for the next 5 years (so that the account balance will be reduced to $0). (a) How much is in the account after the last deposit is made? (b) How much was deposited? (c) What is the amount of each withdrawal? (d) What is the total amount withdrawn?arrow_forward
- A company borrowed $100,000 from a local bank. The loan requires 10 equal annual payments beginning one year from today. Assume an interest rate of 8%. What is the amount of each annual payment? table, calculator function, or excel payment n j present valuearrow_forwardA woman deposited $ 10,000 into her bank account. The money remained in the account for 10 years. For the first 5 years the monthly compound traded an annual nominal interest of 9%. This after the period, the bank changed its interest policy and traded a compound annual nominal interest of 12% for the quarter. Money accumulated in the account at the end of 10 years calculate.arrow_forwardBank 1 is offering interest rate of 8.4% (compounds semiannually) on fixed deposits. Bank 2 is offering interest rate of 8.3% (compounds monthly) on fixed deposits. An investor invested amount of $15,000 for five years in the bank that is offering highest effective annual rate. What is the accumulated amount at the end of five years? a. $22,683 b. $22,634 c. $22,451 d. $22,982arrow_forward
- Brian opened an RRSP account and deposited $3,300 into it. He then deposited $800 at the end of the 1st year and $625 at the end of the 2nd year, into the account. The RRSP was earning 3.20% compounded quarterly. a. What is the accumulated value of the investments at the end of the 2nd year? Round to the nearest cent b. What is the accumulated value of the investment at the end of 5 years? Round to the nearest centarrow_forwardestablish a "rainy day" cash reserve account, a certain company deposits $11,000 of its profit at the end of each quarter into a money market account that pays 1.85% interest compounded quarterly. (Round ur answers to the nearest cent.) a) How much (in $) will the account be worth in 2 years? (b) How much (in $) will the account be worth in 3 years?arrow_forwardAn investor placed $2,000 per year at the end of each year into an investment account. Immediately after the 15th payment, the value of money in the account was $58,720. What is the average annual rate of return the investor has earned on the account? Group of answer choices 7.0% 9.0% 5.1% 6.3%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
The management of receivables Introduction - ACCA Financial Management (FM); Author: OpenTuition;https://www.youtube.com/watch?v=tLmePnbC3ZQ;License: Standard YouTube License, CC-BY