FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
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Chapter AG, Problem G.2BE
1)
To determine
Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The following formula is used to calculate the future value of an amount:
Compound interest: The amount of interest received or earned for multiple-interest time periods, on the sum of principal plus interest earned in that period, for one term is referred to as compound interest.
To Indicate: The interest rate and the number of years invested (annually and semi-annually).
2)
To determine
To Indicate: The interest rate and the number of years invested (annually and semi-annually).
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For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would use. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places.)a. You need to accumulate $20,000 for a trip you wish to take in five years. You are able to earn 10% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for five years. How would you determine the amount of the one-time deposit?b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit?1. You want to retire after working 40 years with savings in excess of $1,000,000. You expect to save $4,000 a year for 40 years…
The formula 1/(1 + r)t is used to calculate
Multiple Choice
The present value annuity factor.
The present value interest factor.
The future value interest factor.
The present value of $1 occurring t periods from now.
The value of the interest rate depends on the --------- of the time period.
Select one:
a. length
b. size
c. minimum
d. maximum
Chapter AG Solutions
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
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- When using the interest tables, the needed interest rate is determined from the intersection between the _____________. a interest rate and number of periods b interest rate and factor type c number of periods of factor type d none of thesearrow_forwardFind the following: a. interest rate per conversion period b. future amount c. compound interest d. conversion period per year e. total number of conversion periodarrow_forward2 Given a set of present value tables, an annual interest rate, the dollar amount of equal payments made, and the number of semiannual payments, what other information is necessary to calculate the present value of the series of payments? A. The future value of the annuity. B. The timing of the payments (whether they are at the beginning or end of the period). C. The rate of inflation. D. No other information is required.arrow_forward
- Calculate the present value of the following annulties, assuming each annuity payment is made at the end of each compounding period. (FV of $1, PV of $1, FVA of $1, and PVA of S1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) \table[[, \table[[Annuity], [Payment]], \table [[ Annual], [Rate]], \table[[Interest], [Compounded]], \table [[Period], [Invested]], \table [[Present Value of], [ Annuity]]], [1., $5,000, 7.0%, Semiannually,3 years,], [2., 10, 000, 8.0%, Quarterly,2 years, ], [3., 4,000, 10.0 %, Annually,5 years,]]arrow_forwardTime value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the future value of an annuity due? PMT x {[(1 + r)ª − 1]/r} x (1 + r) O FV/(1 + r)¹ PMT x {[(1 + r)" - 1]/r} O PMT x ({1 - [1/(1 + r)"]}/r) x (1 + r)arrow_forwardCompute the interest rate if future value (FV) = $8011, present value (FV) = $2685, and number of years (t) = 6.arrow_forward
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Internal Rate of Return (IRR); Author: The Finance Storyteller;https://www.youtube.com/watch?v=aS8XHZ6NM3U;License: Standard Youtube License