FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
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Chapter AG, Problem G.7BE
To determine
Present Value: The value of today’s amount to be paid or received in the future at a compound interest rate is called as present value. The following formula is used to calculate the present value of an amount:
To Indicate: Annual interest rate and number of years involved (annually and semi-annually).
To determine
To Indicate: Annual interest rate and number of years involved (annually and semi-annually).
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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 these
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…
Define the following and provide respective examples;Simple interest Compound interestAnnual Percentage Rate – APR -Also, please provide a definition of a perpetuity and its formula
Chapter AG Solutions
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
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- Q : Write shot note while differentiating the following.i): simple interest VS compound interest.ii): Present VS future valueiii): Annuity due VS Ordinary Annuity.iv): Amortization Schedulearrow_forwardFor part d, told to manipulate the equation: ΔM(t)= rM(t)Δt M(t) represents the money value at time t E is the final value of the note r is the interest rate Δt is expiration minus today's datearrow_forwardFind the following: a. total number of conversion period b. conversion period per year c. interest rate per conversion period d. principal e. compound interestarrow_forward
- How do I find the periodic interest rate for the following?arrow_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_forwardDetermine if the interest rates below are nominal or effective (or effective annual).arrow_forward
- Interest rates or discount rates. Fill in the interest rates for the following table using one of the three methods below: a. Use the interest rate formula, r=FVPV1n−1. b. Use the TVM keys from a calculator. c. Use the TVM function in a spreadsheet. Present Value Future Value Number of Periods Interest Rate $ 493.61 $ 1,902.61 20 ? $17,077.77 $228,416.84 32 ? $34,251.51 $ 63,755.61 24 ? $26,813.61 $212,279.67 10 ? Present Value Future Value Number of Periods Interest Rate $ 493.61 $ 1,902.61 20 nothing% (Round to two decimal places.) $17,077.77 $228,416.84 32 nothing% (Round to two decimal places.) $34,251.51 $ 63,755.61 24 nothing% (Round to two decimal places.) $26,813.61 $212,279.67 10 nothing% (Round to two decimal places.)arrow_forwardWhich of following formulas is used to calculate the present value of a perpetual annuity? Seleccione una: a. P= f / (1+i)^n b. P= f / (i - g) c. P= a / (i - g) d. P= a / (1+i)^n e. F = P * (1+i)^narrow_forwardInterest rates or discount rates. Fill in the interest rates for the following table, , using one of the three methods below: FV a. Use the interest rate formula, r= PV - 1. b. Use the TVM keys from a calculator. c. Use the TVM function in a spreadsheet. Present Value Future Value Number of Periods Interest Rate 529.63 5 1,884.87 20 6.55 % (Round to two decimal places.) $17 207.92 $223,893.69 40 % (Round to two decimal places.)arrow_forward
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