I just bought a 10 year ordinary annuity that promises to pay 1,500 at the end of each next 10 years. If the appropriate interest rate for this annuity is 7.8% what is the present value of this annuity? If I want to extend my annuity another ten years, if I pay more money today, I can continue to receive $1,500 per year for
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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
Calculate the future value of the following annuity streams: a. $5,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually. b. $5,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent compounded quarterly. c.
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
14 multiple choice questions: Annuities, FV, PV, years, interest rate, loans, mortgages, down, payment
1. Future Value. What is the future value of a. $773 invested for 14 years at 11 percent compounded annually? b. $210 invested for 7 years at 6 percent compounded annually? c. $650 invested for 10 years at 9 percent compounded annually? d. $615 invested for 7 years at 14 percent compounded annually? 2. Present Valu
You have a chance to buy an annuity that pays $5,000 at the beginning of each year for 5 years. You could earn 4.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? a. $20,701 b. $21,791 c. $22,938 d. $24,085 e. $25,289
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
Your client is 45 years old, and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $9,000 per year, and you advise her to invest it in securities which you expect to provide an average annual return of 10 percent. If she follows your advice, how much money would she have a
(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
What is the maximum amount you would pay for an asset that generates an income of $150,000 at the end of each of five years if the opportunity cost using funds of 9%? Explain the concept and the calculations.
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
Which of the following cash flows is equivalent to receiving $125.00 today assuming a 9% annual discount rate? $192.33 five years from today $229.87 seven year from today $163.12 three years from today $312.67 ten years from today
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
Wiseman Video plans to make four annual deposits of $2,000 each to a special building fund. The fund's assets will be invested in mortgage instruments expected to pay interest at 12% on the fund's balance. Using the appropriate annuity table, determine how much will be accumulated in the fund on December 31, 2014, under each o
See attached file. What is the payoff on a 30 year, 6% morgage of $255,413 with a payment of $1,531.33 with 7 years remaining. I would like to know if there is a way to calculate this in Excel without creating a long amitorization schedule for 30 years. I can't seem to get a formula to work. I will attach the rest of the a
1. Define the various types of life insurance. 2. How are premiums and dividends taxed? How are death benefits taxed?
(Rate of return of an annuity) Paul's Perfect Peugeot says they'll sell you a brand new Italian's Iron Man motor scooter for $1699. Financing is available, and the terms are 10% down and payments of $46.57 a month for 40 months. What annual interest rate is Paul charging you?
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
17. Calculate the present value of an annual payment of $3,000 per year for ten years at 8% (ordinary annuity) 18. How much will you have at the end of the 6th year if you invest $5,000 annually for six years at 7% annual rate, if you start one year from today?
Calculate the present value for the following questions: 1. $45,000 today in one lump sum. 2. $70,000 paid to you in seven equal payments of $10,000 at the end of each of the next seven years. 3. $80,000 paid in one lump sum 7 years from now
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
See attached file. 10. Susan Robinson's retirement fund of $600,000 13. Net Present Value of two investment opportunities 14. Withdrawal amounts for great uncle Claude's savings 24. Annual withdrawals of future value of 25 deposits of $4500 for 25 years
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