Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter F, Problem F.10CEP
1.
To determine
To choose: The investment opportunity of receiving one payment of $160,000 in the current year or receiving $50,000, $25,000, $55.000, $30,000, and $40,000, respectively, over the next five years, assuming 6% interest rate.
2.
To determine
To choose: The investment opportunity of receiving one payment of $160,000 in the current year or receiving $50,000, $25,000, $55.000, $30,000, and $40,000, respectively, over the next five years, if the
3.
To determine
The amount of cash flow in the year 5 that has to be indifferent between the two plans, assuming a 10% interest rate.
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Please answer a , b and c
a. An investment will pay $50 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 9% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent.
Present value: $ __________
Future value: $ ___________
b. Your parents will retire in 20 years. They currently have $340,000 saved, and they think they will need $1,250,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places. ___________ %
c. If you deposit $2,000 in a bank account that pays 8% interest annually, how much will be in your account after 5 years? Do not round intermediate calculations. Round your answer to the nearest cent.
Tom Alexander has an opportunity to purchase any of the investments shown in the following table
Investment
Price
Single cash inflow
Year of Receipt
A
$18,000
$30,000
5
B
$600
$3,000
20
C
$3,500
$10,000
10
D
$1,000
$15,000
40
The purchase price, the amount of the single cash inflow, and its year of receipt are given for each investment. Which purchase recommendations would you make, assuming that Tom can earn 10% on his investments?
The present value of Investment A is $
The present value of Investment B is $
The present value of Investment C is $
The present value of Investment D is $
Which purchase recommendations would you make, assuming that Tom can earn 10% on his investments?
A.Investment B
B.Investments A and C
C.Investments B and C
D.Investment D
Solve it on Excel solver as well! Ann is considering her investment policy for the next 4 years. She will have £750000 available at the beginning of each of the next four years.
Each year Ann expects to have available both certificates of deposit returning 3.55% after 1 year and ones returning 10.5% after 2 years.At the beginning of the first year, she will also have an opportunity to make a special investment that would return 30.2% after four years. She is, however, allowed to invest no more than £4500 into this option.
Assume that all funds can be reinvested at maturity. What is the maximal total interest (in pounds) that Ann can earn by the beginning of the fifth year?
Chapter F Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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