bm - Present value of \$1 for 18 years 0.285 0.250 0.215...

This preview shows page 1. Sign up to view the full content.

Financial Accouting 1) Paul Parent is evaluating investment alternatives for saving for his infant daughters college education. He has  estimated that he will need \$225,000 upon her graduation from high school in 18 years. Paul has the following  options:  1. Locking in an 8 percent investment with a lump sum payment today  2. Earning a 9 percent return based on annual even contributions over the next 18 years, or  3. Locking in a 7 percent investment for \$5,000 and earning a 10% return on even annual contributions.  Paul has the relevant present value tables that show the following factors:  ………………………………… .... …7%……. 8%……….…9%……….10%  Future value of \$1 for 18 years 3.379    3.996 4.717       5.559  Future value of an annuity for 18 years   33.999  37.45 41.301       45.599
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Present value of \$1 for 18 years 0.285 0.250 0.215 0.180 Present value of an annuity for 18 years 9.958 9.372 8.787 8.201 Assuming Paul can afford any of these options, which alternative results in the lowest investment? 2) Lisa's Boutique is renting prime store space at the Regional mall and just signed a five-year lease effective January 1, 20X4 with the following terms: Refundable security deposit \$1,500 Monthly lease payments \$3,000 Lease bonus due at signing \$18,000 Lisa has had to make significant renovations to the store prior to moving in. The renovations cost \$50,000 and have a useful life of 8 years. Lisa's Boutique will record occupancy expense for the year ended December 31, 20X4 of :...
View Full Document

• Winter '08
• worfy
• lump sum payment, refundable security deposit, Paul Parent, infant daughters college, percent investment

{[ snackBarMessage ]}

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern