Purchase Solution

# Account balances, interest compounded & time value of money

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1). A corporation has the following account balances. Common Stock, \$1 par value, \$40,000;Paid in Capital in Excess of Par Value, \$1,800,000. Based on this information, the

__a). average price per share issued is \$4.60

__b). legal capital is \$1,840,000

__c). number of shares issued is \$40,000.

__d) number shares outstanding is 1,840,000

2). Len Crawford borrowed \$65,000 on June 1, 2009. This amount plus accrued interes at 8% compounded annually is to be repaid on June 1, 2022. Len has obtained the following values related to the time value of money to help her with her financing process and compounded interest decisions.

Present value of 1 for 13 periods at 8% 0.36770

Future value of 1 for 13 periods at 8% 2.71962

Present value of an annuity of 1 for 13 periods at 8% 7.90378

Future value of an annuity of 1 for 13 periods at 8% 21.49530

a). \$176,775

b). \$116,375

c). \$132,600

d). \$310,707

3). Ron & Len Smith invested \$10,000 in a savings account paying 5% annual interest when their son Jack, was born.

They also deposited \$500 on each of his birthday until he was 2 0(including his 20th b-day). Ron & Len have obtained the following values related to the time value of money to help with thier planning process for their compounded interest decisions.

Present value of 1 for 20 periods at 5% 0.37689

Future value of 1 for 20 periods at 5% 2.65330

Present value of an annuity of 1 for 20 periods at 5% 12.46221

Future value of an annuity of 1 for 20 periods at 5% 33.06595

a). \$26,533

b).\$53,066

c).\$43,066

d).\$30,000

##### Solution Summary

Account balances, interest compounded and the time value of money is examined.

##### Solution Preview

1). A corporation has the following account balances. Common Stock, \$1 par value, \$40,000;Paid in Capital in Excess of Par Value, \$1,800,000. Based on this information, the
__a). average price per share issued is \$4.60
__b). legal capital is \$1,840,000
__c). number of shares issued is \$40,000.
__d) number shares outstanding is 1,840,000

Answer: __b). legal capital is \$1,840,000

2). Len Crawford borrowed \$65,000 on June 1, 2009. This amount plus accrued interes at 8% compounded annually is to be ...

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