What is the present value of $10,000 received
a. 12 years from today when the interest rate is 4% per year?
b. 20 years from today when the interest rate is 8% per year?
c. 6 years from today when the interest rate is 2% per year?
We use the Present Value formula
PV = FV/(1+rate)^n
FV = $10,000 as given
Rate is as given and ...
The solution explains how to calculate the present value and then goes through each question to show how to apply the formula.
The answer to various accounting questions
BE2-4 Becky Sherrick's regular hourly wage rate is $14, and she receives an hourly rate of
$21 for work in excess of 40 hours. During a January pay period, Becky works 45 hours. Becky's
federal income tax withholding is $95, her FICA tax withheld is $53.20, and she has no voluntary
deductions. Compute Becky Sherrick's gross earnings and net pay for the pay period. (DO NOT SOLVE-USE AS REFERENCE FOR NEXT PROBLEM)
BE2-5 Data for Becky Sherrick are presented in BE2-4. Prepare the journal entries to record (a) Becky's pay and withholdings for the period, and (b) the payment of Becky's wages. Use January 15 for the end of the pay period and the payment date.
BE2-19 Porter Company signed a lease for an office building for a period of 10 years. Under the lease agreement, a security deposit of $10,000 is made. The deposit will be returned at the expiration of the lease with interest compounded at 5% per year. What amount will Porter receive at the time the lease expires?
BE2-20 Gordon Company issued $1,000,000, 10-year bonds and agreed to make annual sinking fund deposits of $80,000. The deposits are made at the end of each year into an account paying 5% annual interest. What amount will be in the sinking fund at the end of 10 years?
BE2-25 Smolinski Company is considering an investment which will return a lump sum of $500,000 five years from now. What amount should Smolinski Company pay for this investment to earn a 15% return?
BE2-27 Kilarny Company is considering investing in an annuity contract that will return $20,000 annually at the end of each year for 15 years. What amount should Kilarny Company pay for this investment if it earns a 6% return?
BE2-32 Galway Bay Enterprises issued 10%, 8-year, $2,000,000 par value bonds that pay interest semiannually on October 1 and April 1. The bonds are dated April 1, 2002, and are issued on that date. The discount rate of interest for such bonds on April 1, 2002, is 12%. What cash proceeds did Galway Bay receive from issuance of the bonds?View Full Posting Details