Managerial Accounting
6th Edition
ISBN: 9781259726972
Author: John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter B, Problem 7E
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 return that will be earned.
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ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula.
A. Suppose you invest
$ 11,400 today. What is the future value of the investment in
29 years, if interest at
7% is compounded annually?
B
B. Suppose you invest
$ 11,400 today. What is the future value of the investment in
29 years, if interest at
7% is compounded quarterly?
4
5
6
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C. Suppose you invest
St
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570 monthly. What is the future value of the investment in
29 years, if interest at
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Question 1
Question 2
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17
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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.
Rate of return-Annuity What is the rate of return on an investment of $11,733 if the investor will receive $2,300 each year for
the next 14 years?
The rate of return on the investment, r, is %. (Round to two decimal places.)
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- ربو Suppose an investor will receive payments at the end of the next six years in the amounts shown in the table. 6 248 Ycar 1 5 4 2 3 Payment 465 233 632 365 334 If the interest rate is 3.5% compounded semiannually, what is the present value of the investment?. [Assume the first payment will arrive one year from now].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_forwardAn investment offers $8800 per year for 14 years with the first payment occuring one year from now. Assume the required returnis 12 percent. a. What is the value of investment today? b. What would the value be if the payment occured for 39 years? c. What would the value be if teh payments occured for 74 years? d. What would the value be if the payments occured forever?arrow_forward
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