Concept introduction:
Present Value:
Present value of money means the present or current value of a future
Future Value:
The future value is the value of present cash flow at specified time period and at specified
Requirement 1:
We have to determine the amount to be deposited today.
Answer to Problem 18E
The amount to be deposited today will be $42480.
Explanation of Solution
Concept introduction:
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 rate of return.
Requirement 2:
We have to determine the amount to be deposited today.
Answer to Problem 18E
The amount to be deposited today will be $12855
Explanation of Solution
Concept introduction:
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 rate of return.
Requirement 3:
We have to determine the best option among the two.
Answer to Problem 18E
We will have $463 now as the future value of $463 after 10 years will be $1096.1062 which is greater than $1000.
Explanation of Solution
We will have $463 now as the future value of $463 after 10 years will be $1096.1062 which is greater than $1000.
Concept introduction:
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 rate of return.
Requirement 4:
We have to determine the cost of sticker in eight years.
Answer to Problem 18E
The cost of sticker in eight years will be $132.975
Explanation of Solution
Concept introduction:
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 rate of return.
Requirement 5:
We have to determine the cost of new home after eight years.
Answer to Problem 18E
The cost of new home after eight years will be $339,760.60
Explanation of Solution
Concept introduction:
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 rate of return.
Requirement 6:
We have to determine the amount of today’s investment.
Answer to Problem 18E
The amount of today’s investment will be $10852.32
Explanation of Solution
Concept introduction:
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 rate of return.
Requirement 7:
We have to determine the present value of given situation.
Answer to Problem 18E
The present value of amount will be $5,734,500
Explanation of Solution
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Chapter B Solutions
MANAGERIAL ACCOUNTING W/CONNECT
- f4. Subject :- Accounting What is the future value in 5 years of a $7,000 investment placed into a bank account today that will pay you 12% interest compounded quarterly? What is the present value of an investment that will pay you $1500/year forever? Use i=9% What is the present value of an investment that will pay you $2500/year forever? Use i=6%arrow_forwardPLEASE ANSWER THESE 2 QUESTIONS. THANKYOU BARTLEBY. 11. What will be the future worth of money after 12 months, if the sum P25,000.00 is invested today at a simple interest rate of 1% per year? 12. If you borrowed P 10,000.00 from a bank with 8% interest per annum, what is the total amount to be repaid at the end of one year?arrow_forwardQ2 Suppose you want to have $400,000 for retirement in 25 years. Your account earns 7% interest. a.how much would you need to deposit in the account each month ? $_______b.how much interest will you earn ? $____arrow_forward
- Q : no 1 (A) Suppose you save $4,000 per year at the beginning of each year for 10 years and earn 8.5% interest per year. How much will you have at the end of 10 years? (B) you have Rs.25,000 which you deposited in a bank account, bank promised to pay you back Rs.75,000 after 8 years.what rate offered by bank? (C) you borrowed Rs.500,000 at 18% for five years. Part a) how much you will pay each year to settle this loan? Part b) If you decided to settle this loan after two years, what additional amount you will pay at the end of two years to fully payback this loan while bank is not imposing any fine on you?arrow_forward! Pls answer ! Engineering Economics (bartleby = 3 max questions)1. Marta invest P50000 into an index annuity that’s averaging 8.4% compounded semi-annually. Atthis rate, how many years for her account to reach P 1000000?2. An economy is experiencing inflation at an annual rate of 8%. If this continues, what will P1000be worth 2 years from now, in terms of today’s pesos? 3. The future worth of P10000 at 5% simple annual interest rate is P12500. How long is the interestperiod?arrow_forwardQ5. A systems engineer who invested wisely can retire now because she has $2,000,000 in her self-directed retirement account. Determine how many years she can withdraw (a) $100,000 per year, or (b) $150,000 per year (beginning 1 year from now) provided her account earns at a rate of 5% per year. (c) Explain why the increased annual withdrawal from $100,000 to $150,000 per year is important.arrow_forward
- You are opening an investment account that will earn 11.5% compounded annually. You will invest $1,000 today, $5,000 one year from today, $18000 two years from today, $8,000 three years from today, and $12,000 four years from today. What will the value of your account be 4 years from today? Question 2 options: 53,225 59,065 51,775 54,635 58,705arrow_forward02a) Why is wealth maximization considered as a better measure than profit maximization? b) You are going to deposit in saving account Tk. 3,00,000 today. You will receive Tk.4,80,000 from the bank at the end of year 7. What will be the rate of interest of yourdeposit? c) Mr. Kobir has been offered to deposit of Tk. 10000 today with an interest rate of 12%.Calculate the value on this opportunity after 5 years, if the interest rate is:(i) Compounded Semi-Annually.(ii) Compounded Monthly. d) Gabrielle just won Tk. 10,00,000 in the state lottery. She is given the option of receivingeither alternative A or B shown in the following table at the end of each of the next 5years. She decides to choose the payment alternative—annuity or the mixed stream ofpayments— that provides the higher future value at the end of 5 years. If Gabrielle canearn 5% annually on her investments, which option should she take? End of year Cash flow stream…arrow_forward15. a. Why learning Time value of Money concepts is important?b. If we deposit Rs. 1,000 today calculate the time taken for the deposit to double if the interest rate is 10% , compounded annually , using a. Future value method b. Rule 72 c. Rule 69arrow_forward
- You are opening an investment account that will earn 6.5% compounded annually. You will invest $1,000 one year from today, $800 two years from today, and 1,200 three years from today. What will the value of your account be 4 years from today? Question 3 options: 3,518 3.586 3,242 3,422 3,393arrow_forwardQ) If you need $40,000 five years from now, what is the minimum amount of money you need to deposit into a bank account that pays 4% annual interest, compounded (give your answers to the nearest cent): (a) annually? $ (b) monthly? $ (c) daily (assuming 365 days in a year)? $ Solve on the white paper. Not solve in excel works.arrow_forward5. You decide to invest $100 into a savings account with an interest rate of 2% annually in2015. The amount of money in your savings account in a given year can be modeled by the following function. P(t)=100(10)^.009 a. Evaluate P(0) and explain what it means in this context. b. Approximately how many years will it take for the amount of money in your bank account to reach $120? c. What year will you have $120 in your savings account?arrow_forward
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