Please help me with your own thoughts and solutions and not from internet sites. Please provide thorough and understandable answers.
Your uncle offers you a choice of $20,000 in 50 years or $45 today. If money is discounted at 13 percent, which offer should you choose? Explain with details and computations. Suppose it is discounted at 10 percent, what will be your answer?
Using time value of money calculations can help a company or individual plan for future needs. What types of future situations will you, as a college student, want to plan for now? Explain with examples.
You and Frank are studying for an upcoming accounting exam. Frank says, "Contributed capital is basically the stockholders' equity of the company. It includes things like the common stock, paid-in capital in excess of par, preferred stock, and retained earnings." Do you agree with Frank? Why or why not? Explain with examples.
Another student in your accounting class says that, as she understands it, most current liabilities appearing on the balance sheet arise from transactions involving operating activities. Do you agree? Why or why not? List three current liabilities that might appear on the balance sheet. For each one, explain the underlying transaction that must have occurred for that specific liability to arise. Indicate, for each liability, whether it is the result of an operating, financing, or investing activity.
The solution deals with discounting, future and present values.