ACC304Week_2Chapter_AppendixAHW

ACC304Week_2Chapter_AppendixAHW - = $11,969.50 + $5,000 X...

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EXERCISE A-1 (5-10 minutes) Rate of Interest Number of Periods 1. a. 9% 9 b. 3% 20 c. 5% 30 2. a. 9% 25 b. 5% 30 c. 3% 28 EXERCISE A-3 (15-20 minutes) Estimated Cash Probability Outflow X Assessment = Expected Cash Flow Present Value $ 200 10% $ 20 X PV 450 30% 135 Factor 550 50% 275 single sum, 750 10% 75 n = 2, I = 6% $ 505 X 0.89 $ 449.45 EXERCISE A-4 (5-10 minutes) (a) Simple interest of $1,600 per year X 8 $12,800 Principal 20,000 Total withdrawn $32,800
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(b) Interest compounded annually—Future value of 1 @ 8% for 8 periods 1.85093 X $20,000 Total withdrawn $37,018.60 (c) Interest compounded semiannually—Future value of 1 @ 4% for 16 periods 1.87298 X $20,000 Total withdrawn $37,459.60 EXERCISE A-5 (10-15 minutes) (a) $7,000 X 1.46933 = $10,285.31. (b) $7,000 X .43393 = $3,037.51. (c) $7,000 X 31.77248 = $222,407.36. (d) $7,000 X 12.46221 = $87,235.47. EXERCISE A-9 (12-17 minutes) (a) $50,000 X .31524 = $15,762.00 + $5,000 X 8.55948 = 42,797.40 $58,559.40
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EXERCISE A-9 (Continued) (b) $50,000 X .23939
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Unformatted text preview: = $11,969.50 + $5,000 X 7.60608 = 38,030.40 $49,999.90 The answer should be $50,000; the above computation is off by 10 due to rounding. (c) $50,000 X .18270 = $ 9,135.00 + $5,000 X 6.81086 = 34,054,30 $43,189.30 EXERCISE A-17 (15-20 minutes) (a) i = 8% PV = $1,000,000 FV = $1,999,000 0 1 2 n = ? FVF( n, 8% ) = $1,999,000 $1,000,000 = 1.999 reading down the 8% column, 1.999 corresponds to 9 periods. (b) By setting aside $300,000 now, Scottie can gradually build the fund to an amount to establish the foundation. PV = $300,000 FV = ? 0 1 2 8 9 FV = $300,000 (FVF 9, 8% ) = $300,000 (1.999) = $599,700Thus, the amount needed from the annuity: $1,999,000 $599,700 = $1,399,300. $? $? $? FV = $1,399,300 0 1 2 8 9 Payments = FV (FVOA 9, 8% ) = $1,399,300 12.48756 = $112,055.52....
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ACC304Week_2Chapter_AppendixAHW - = $11,969.50 + $5,000 X...

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