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ACCT251E6-1through-7Sol - EXERCISE 6-1(510 minutes(a Rate...

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EXERCISE 6-1 (5–10 minutes) (a) (b) Rate of Interest Number of Periods 1. a. 9% 9 b. 2% 20 c. 5% 30 2. a. 9% 25 b. 4% 30 c. 3% 28 EXERCISE 6-2 (5–10 minutes) (a) Simple interest of $2,400 ($30,000 X 8%) per year X 8. . $19,200 Principal .............................................................................. 30,000 Total withdrawn ........................................................ $49,200 (b) Interest compounded annually—Future value of 1 @ 8% for 8 periods .................................................... 1.85093 X $30,000 Total withdrawn ........................................................ $55,527.90 (c) Interest compounded semiannually—Future value of 1 @ 4% for 16 periods .................................... 1.87298 X $30,000 Total withdrawn ......................................................... $56,189.40 EXERCISE 6-3 (10–15 minutes) (a) $9,000 X 1.46933 = $13,223.97. (b) $9,000 X .43393 = $3,905.37. (c) $9,000 X 31.77248 = $285,952.32. (d) $9,000 X 12.46221 = $112,159.89.
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EXERCISE 6-4 (15–20 minutes) (a) Future value of an ordinary annuity of $5,000 a period for 20 periods at 8% $228,809.80 ($5,000 X 45.76196) Factor (1 + .08) X 1.08 Future value of an annuity due of $5,000 a period at 8% $247,114.58 (b) Present value of an ordinary annuity of $2,500 for 30 periods at 10% $23,567.28 ($2,500 X 9.42691) Factor (1 + .10) X 1.10 Present value of annuity due of $2,500 for 30 periods at 10% $25,924.00 (Or see Table 6-5 which gives $25,924.03) (c) Future value of an ordinary annuity of $2,000 a period for 15 periods at 10% $63,544.96 ($2,000 X 31.77248) Factor (1 + 10) X
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