Fundamental Financial Accounting Concepts, 9th Edition
Fundamental Financial Accounting Concepts, 9th Edition
9th Edition
ISBN: 9780078025907
Author: Thomas P Edmonds, Christopher Edmonds, Frances M McNair, Philip R Olds
Publisher: McGraw-Hill Education
Question
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Chapter F, Problem 1E

a.

To determine

Calculate the future value of $30,000 invested at 8% for 10 years.

a.

Expert Solution
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Explanation of Solution

Future value:

The future value is value of present amount compounded at an interest rate until a particular future date.

Calculate the future value of $30,000 invested at 8% for 10 years.

Future value of amount invested = (Future value factor of single  payment at 8% for 10 years)×Amount=2.158925×$30,000=$64,768

Therefore, the future value of the amount invested is $64,768.

b.

To determine

Calculate the future value of eight annual payments of $2,000 at 9% interest.

b.

Expert Solution
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Explanation of Solution

Calculate the future value of eight annual payments of $2,000 at 9% interest.

Future value of annuity}(Future value factor of annuity   payment for 8 years at 9%)×Amount=11.028474×$2,000=$22,057

Therefore, the future value annuity is $22,057.

c.

To determine

Calculate the amount that must be deposited today at 8% to accumulate $60,000 in five years.

c.

Expert Solution
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Explanation of Solution

Present value:

Present value is the current value of an amount that is to be paid or received in future. Present value is determined by using the formula:

Present Value = 1(1+i)n×Amount

Calculate the amount that must be deposited today at 8% to accumulate $60,000 in five years.

Present value = (Present value factor of the single payment at 8% for 5years)×Amount=0.680583×$60,000=$40,835

Therefore, the amount that must be deposited today at 8% to accumulate $60,000 in five years is $40,835.

d.

To determine

Calculate the annual payment on a 10 year, 6 percent, $50,000 note payable.

d.

Expert Solution
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Explanation of Solution

Present value:

Present value is the current value of an amount that is to be paid or received in future. Present value is determined by using the formula:

Present Value = 1(1+i)n×Amount

Annuity:

An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time.

Calculate the annual payment on a 10 year, 6 percent, $50,000 note payable.

Present value of annuity payment  =Notespayable(Present value factor of annuity for 10 years at 6% )=$50,0007.360087=$6,793

Therefore, the annual payment on a 10 year, 6 percent, $50,000 note payable is $6,793.

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Chapter F Solutions

Fundamental Financial Accounting Concepts, 9th Edition

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