MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter B, Problem 14E
To determine
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified
We have to determine the rate of interest that must be earned.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following investments will have the highest future value atthe end of 10 years? Assume that the effective annual rate for allinvestments is the same.
a. Investment E pays $250 at the end of every year for the next 10
years (a total of 10 payments).
b. Investment B pays $125 at the end of every 6-month period for the
next 10 years (a total of 20 payments).
c. Investment C pays $125 at the beginning of every 6-month period for
the next 10 years (a total of 20 payments).
d. Investment D pays $2,500 at the end of 10 years (a total of one
payment).
e. Investment A pays $250 at the beginning of every year for the next10 years (a total of 10 payments).
Calculate the future value for the following investment’s
Initial investment of $6,000, maturity 5 Years, interest paid annually at 4.5% Show your work
Initial investment of $6,000, maturity 5 years, interest paid semi-annually at 4.5% Show your work
What is the value accumulated at the end of 30 years if $300 deposited at the end of each month in a mutual fund account that earns 12 percent annually during the period.
Ans.
A mortgage calls for monthly payments of $970.30, including interest at 7.6 percent. The current value of the mortgage is $95,258.72. Approximately how long will it take to fully amortize the mortgage?
Ans.
An income-producing property is priced at $550,000 and is expected to generate the following after-tax cash flows: Year 1: $50,000; Year 2: $55,000; Year 3: $60,000 and $600,000. Calculate the annual IRR for this investment opportunity.
Ans.
Chapter B Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
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
- Real Estate investor borrowed Ksh 10million to invest in an asset at an interest rate of 10% p.a for 30 years. Calculate: I). Tha annual payment ii). The monthly payment iii). If the asset is expected to generate a return of Ksh 100000 per month. Advise the investor whether the investment in the asset is viable iv). Prepare a loan amortization schedule for the first ten years v). What other factors will you advise the investor to considerarrow_forwardFind the future worth in year 10 of an investment that starts at $1700 in year 1 and increases by 9% each year. The interest rate is 15% per year. Select one: O a. 31210 O b. 11753 O c. 39665 O d. 47601 O e. 7706arrow_forwardAn investment pays $200 at the end of Year I. $250 at the beginning* of Year 2. $387 at the end of Year 4. and $500 at the beginning of Year 6. If other investments of equal Mk earn 7.5% annually. what will be this investments present value and future value?arrow_forward
- What would you pay for an investment that pays you $34000 at the beginning of each year for the next ten years? Assume that the relevant interest rate for this type of investment is 11%. $211024. $222260. $200231. $234235.arrow_forwardAccounting 2) You set up a 45-year investment plan with the intention of amassing 1,500,000 at the end of the 45 years. Assume an average return of 7% per year. a) Set up an IVP that describes the progress of the 45-year investment plan. (You will be putting in a fixed payment each month) b) What should be your monthly payment over the 45-years to ensure your investment plan reaches 1,500,000? c) What should your monthly payment be if you were to start an investment plan reaching the same $1,500,000 over 20 years?arrow_forwardAmortization, Loan & InflationSuppose you take out a $100,000, 20- year mortgage loan to purchase a condo. The interest rate is 6%. Assume you make payments on the loan annually at the end of each year.a. What fraction of the initial loan payment is interest?b. What fraction of the initial loan is amortized? c. If the inflation rate is 2%, what are the real values of the first& last (year-end) payments?arrow_forward
- Algoe expects to invest $2,500 annually for 15 years to yield an accumulated value of $62,822.50 on the date of the last investment. For this to occur, what rate of interest must Algoe earn? (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places. Future Value Annuity Payment Table Factor Interest Rate %arrow_forwardCalculate the future value of an investment if the annual interest rate is 9%, number of payments is 30, and each payment of $1000 is made at the end of the year. A. $102,893 B. $136,308 C. $108,212 O D. $98,234arrow_forwardConsider an investment which pays $3,000 at the end of year 1, year 2, and year 3. In year4, the investment will pay $4,000 and this payment will grow by 2% each year forever. If theappropriate interest rate is 9%, what is this investment worth today? (Show Using BA II Plus or By Hand)arrow_forward
- Answer followings (a) Suppose you wish to borrow $60,000 at an annually compounded interest rate of 16% for a period of 14 years. What would be the annual repayment? (b) You wish to invest $30,000 today in order to save $60,000 for a deposit to buy a house in several years’ time.How many years must you invest in order to have a future value of $60,000 if the interest rate is 12%? (c) What is the effective annual rate of a savings account with an annual interest rate of 5.9% compounded quarterly?arrow_forwardSteffi Derr expects to invest $5,000 annually that will earn 10%. How many annual investments must Derr make to accumulate $92,656 on the date of the last investment? (PV of $1. FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places. Future Value Annuity Payment Table Factor Annual Investments investmentsarrow_forwardYou have RM 5,000.00 you want to invest for the next 45 years until retirement. You are offered an investment plan that will pay you 6 percent per year for the next 15 years and 10 percent per year for the last 30 years.a) Explain the time value of money principleb) Identify the underlying assumption of the time value of money principlec) Draw a graph that illustrates the relationship between interest rates and the present value of RM 1,000.00 to be received in one year.d) Suggest how you can minimize the amount of cash you must invest in order to reach your retirement goal.e) Compute the amount you will have at the end of the 45 years.f) Calculate the amount you would have if the investment plan pays 10 percent for the first 15 years and 6 percent per year for the next 30 years.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
