Shelley wants to cash in her winning lottery ticket. She can either receive 10, $100,000 semiannual payments starting today, or she can receive a lump-sum payment now based on a 6% annual interest rate. What is the equivalent lump-sum payment? a. $853,020 b. $801,969 c. $744,090 d. $878,611
I plan on depositing 5,000 at the end of ever year with an expected return on the account being 9.8%, how long will it take me to reach $1 million in my account? Now what if I only deposited 4,000, what is my expected return on the account to have $1 million in my account. 16. Mattel needed to act quickly when they learned
Which of the following 10 year annuities has the greatest present value? Assume all the annuities have the same interest rate. An annuity that pays $1,000 at the end of each year? An annuity that pays $500 at the beginning of every six months? An annuity that pays $1,000 at the beginning of each year? An annuity that
Financial Statement understanding and compare and contrast the allowance method for recording collectibles with the direct write-off method. Evaluate why one method is GAAP and one is not.
Illustrate the importance of an accurate balance sheet to investors with an example. Differentiate between operating activities, investing activities, and financing activities. Illustrate the concept of the time value of money by using an example, including a measurement tool and its application. Determine whic
Examine the concept of time value of money. Analyze why it is important for accountants to have an understanding of compound interest, annuities, and present value concepts. Examine at least three situations in which accounting measures are based on present values. Determine if these present value applications invo
4-5: PRICE/EARNING RATIO A company has an EPS of $2.00, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0x. What is its P/E ratio? 4-8: BASIC EARNING POWER Duval manufacturing recently reported the following information: Net income $600,000 ROA $ 8% Interest expense $225,000 Duval's tax r
4.1 If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years? 4.2 What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually? 4.6 What is the future value of a 7%, 5-year ordinary annuity that pays $300
HIGH DESERT GOLF CLUB High Desert Golf Club (HDGC), located in Rifle, Colorado, was a public golf course, owned by a private corporation. In January the club's manager, Lee Jeffries, was faced with a decision involving replacement of the club's fleet of 40 battery-powered golf carts. The old carts had been purchased five y
(1) Based on the current interest rate environment, are there specific maturities you'd favor? What about floating rate bonds in the current interest rate environment...what are your thoughts with regard to those? Lastly...there are treasury bonds called TIPS...explain what they are and what advantages and/or disadvantages you s
Determine the future value of this annuity if your year $5,000 is invested at the end of the first year.
Assume you have planning ti invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity if your year $5,000 is invested at the end of the first year.
Kevin has found the woman of his dreams and will marry soon. He has a bright financial future and quite impressed with what he will bring in monetary terms to the relationship. He's presently gainfully employed and expects that his earnings power will increase substantially after he gains more work experience and completes bu
Answer each of the following independent questions 1. Alex Meir recently won a lottery and has the option of receiving one of the following three prizes. (1) 64,000 cash immediately, (2) $20,000 cash immediately and six-period annuity of $8,000 beginning one year from today, (3) a six period annuity of $8,000 beginnin
1. Define the various types of life insurance. 2. How are premiums and dividends taxed? How are death benefits taxed?
Creative Games Corp has a contributory retirement plan in which 5% of the employees' annual wages is deducted to meet the cost of the benefits. The firm contributes an amount equal to the employee contribution. The plan uses a 5-year graded vesting procedure; it has a normal retirement age of 60 for all employees, and the bene
Elena Diaz is 57 years old and has been widowed for 13 years. Never remarried, she has worked full-time since her husband died - in addition to raising her two children, the youngest of whom is now finishing college. After being forced back to work in her 40s, Elena's first job was in a fast-food restaurant. Eventually, she updg
1. Suppose the interest rate is 7% APR with monthly compounding. What is the present value of an annuity that pays $80 every 3 months for 4 years? The present value of the annuity is $ (round to two decimal places) 2. If you deposit $1 into a bank account that pays 0.5% per month for three years, the amount you will
Harvey Alexander, an all-league professional football player, has just declared free agency. Two teams, the San Francisco 49ers and the Dallas Cowboys, have made Harvey the following offers to obtain his services: 49ers: $1 million signing bonus payable immediately and an annual salary of $1.5 million for the five-year term o
1) As the interest rate increases for any given period, the future value of an amount will A) decrease. B) remain unchanged. C) increase. D) move toward 1. 2) Bob plans to fund his individual retirement account (IRA) with the maximum contribution of $5,000 at the end of each year for the next 15 years. If Bob can earn 10
QN1. A Customer asks the lump sum required today to establish a $50,000 retirement annuity beginning at the end of the first year of retirement and continuing for the next 14 years. The retirement annuity is to keep pace with inflation, which is expected to be 4 percent annually (the first payment is $50,000). Your client expect
1. A taxpayer may litigate a tax dispute without first paying the tax in the: a) U.S. District Court b) U.S. Tax Court c) U.S. Court of Federal Claims d) All of the above 2. A business bad debt is deductible for tax purposes as a(n): a) Short-term capital loss b) Long-term capital l
4.3 Calculate the following values, assuming a discount rate of 8%: a. present value of a perpetuity (also called a perpetual annuity) of $50 received each year at the end of each year b. present value of an annuity of $50 received at the end of each year for 5 years c. present value of an annuity of $50 received at
1. Your firm wants to lease a $500,000 piece of equipment. The equipment has a 5-year life and a salvage value of $100,000 at the end of year 5. Depreciation is straight-line over 5 years to a zero book value. There will be 5 pre-paid lease payments on the equipment. Purchasing the asset has a positive NPV for your firm. Ass
See the attachments. 2-9. Yoakum Company reported the following information related to inventory and sales: Units Unit Cost Beginning inventory 1,000 $20 Purchase No. 1 7,000
You are earning a salary of 30,000. You plan on retiring in 25 years. At the beginning of retirement you would like to have accumulated enough money in your 401k plan to receive an annuity for 20 years equal to 80% of your last years' salary. 1. If you assume that your raises will just match the inflation rate (estimated 3% a
Quattro Corporation signed a lease from Cinco Leasing Company of July 1, 20X3, for equipment having a five-year useful life. The lease does not include any option to purchase the equipment at the end of the four-year lease term, nor does it include a provision for ownership transfer. Five equal payments of $10,000 per year are r
See attached for better formatting. Q5-7 DR. FRANKENSTEIN IS CONSIDERING BUILDING A PORTFOLIO CONTAINING TWO ASSETS, S AND G. ASSET S WILL REPRESENT 70% OF THE DOLLAR VALUE OF THE PORTFOLIO, AND ASSET G WILL REPRESENT THE REMAINING 30%. THE EXPECTED RETURNS OVER THE NEXT 5 YEARS 2001-2005, FOR EACH OF THESE ASSETS IS SHOWN
How would a manager calculate present value and future value for single amounts, annuities, and uneven streams of cash flow.
P1 Deposits to accumulate future sums. For each of the cases shown in the following table, determine the amount of equal, annual, end of year deposits necessary to accumulate the given sum at the end of specified period, assuming stated annual interest rate. Case Sum to be Accumulation
1. You won the lottery and will receive $50,000 per yr for 20 yrs. Assume 4% interest used to evaluate annuity and you receive pymt at the begining of the yr a. what is the PV of the lottery b/ how much interest was earned on the PV to make $50,000 a year pymt. 2. You are shopping for a new home. You have a choice of financi
Ling opened an annuity to save for a down payment on a home. The annuity was created with an initial deposit of $3,500 (end of year). At the end of each of the following ten years, a payment of $4000 is made into the annuity. The interest rate is 2% compounded annually. a) Compute the balance at the end of 10 years by tabu