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Unformatted text preview: Sheet1 Page 1 ACCT 3311 FALL 2007 PAGE 61 Example 1. Case 1. $1.00________________________________ $xxx_____ 0 1 2 3 4 5 6 7 If you deposit $1 at the beginning of period 1, how much will you have at the end of period 7 if the fund earns the following interest compounded periodically? a. 5% b. 10% c. 15% Case 2. $x.xx______________________________ _$50,000____ Suppose you want $50,000 at the end of period 10. How much do you have to deposit at the beginning of period 1 if the fund earns the following interest compounded periodically? a. 4% b. 11% Case 3. Total? $100 $100 $100 $100 $100 0 1 2 3 4 5 Suppose you deposit $100 at the end of each of periods 1 through 5. How much will you have in the fund at the end of period 5 (the date of the last deposit) if the fund earns the following interest compounded annually? a. 6% b. 12% Case 4. Total? $100 $100 $100 $100 $100 0 0 1 2 3 4 5 Suppose you deposit $100 at the beginning of each of periods 1 through 5. How much will you have in the fund at the end of period 5 (one period after the date of the last deposit) if the fund earns the following interest compounded annually? a. 6% b.12% Case 5. $xxx ($500) ($500) ($500) ($500) ($500) 0 1 2 3 4 5 How much do you have to put in a fund at the beginning of period 1 to permit withdrawals of $500 at the end of each of the periods 1 through 5 if the fund earns the following interest rates? a. 7% b. 14% Case 6. $xxx 0 1 2 3 4 5 6 h& 10 Sheet1 Page 2 ($500) ($500) ($500) ($500) ($500) $0 0 1 2 3 4 5 How much do you have to put in a fund at the beginning of period 1 to permit withdrawals of $500 at the beginning of each of the periods 1 through 5 if the fund earns the following interest rates? a. 7% b. 14% o ACCT 3311 FALL 2007 PAGE 62 Example 2. You invest $1,000 for 10 years at 16% (annual) interest compounded quarterly. How much will you have at the end of 10 years? Example 3. How much do you need to invest today at 10% interest compounded annually to have $8,000 in 6 years? Example 4. On 112004, Bicker Company sold equipment to Fickle Company. Fickle gave Bicker a note promising to pay $6,000 on 12312007. Bicker than offered the note to a bank. How much cash would the bank give Bicker for the note? Example 5. Billingham Company invests $20 million in a fund which will earn 7% interest compounded annually. How long will it take the fund to grow to $50 million? Example 6. Cardinal Company invested $10 million on January 2, 2004. It wants the fund to grow to $20 million by December 31, 2020. What is the minimum interest rate which the fund must earn to grow to the desired amount? Example 7. You deposit $1,000 to an fund at the end of each year for 3 years starting on Dec. 31, 2001. How much will you have on Dec. 31, 2003? Dec. 31, 2004? Dec. 31, 2009 if: a. the fund earns 4% interest compounded annually?...
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This note was uploaded on 05/02/2008 for the course ACCT 3311 taught by Professor Lee during the Spring '08 term at UT Arlington.
 Spring '08
 lee

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