Homework Session 17 Spring 2010

# Homework Session 17 Spring 2010 - 58,800 Cash (-A).

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Homework Session 17 Spring 2010 E9–15. Req. 1 \$50,000 x 0.7513 = \$37,565 Req. 2 \$10,000 x 2.4869 = \$24,869 It is better to pay in three installments because the economic cost is less. Req. 3 \$40,000 x 0.5132 = \$20,528 Req. 4 \$15,000 x 6.1446 = \$92,169 E9–16. Present value of annuity: \$10,100 x 4.8684 = \$49,171 Because the present value of the annuity is less than the immediate cash payment, the winner should select the cash payment. E9–17. Present value of future amount: \$900,000 x 0.5019 = \$451,710 Because the client already has \$200,000 in the account, she needs to deposit an additional \$251,710. E9–18. Present value of annuity: \$13,000 x 3.2397 = \$42,116

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E9–19. Present value of unequal payments: \$11,000 x 0.9091 = \$10,000 30,000 x 0.8264 = 24,792 50,000 x 0.7513 = 37,565 \$72,357 E9–20. Present value of cash payments: \$15,000 x 5.9713 = \$89,570 120,000 x 0.5820 = 69,840 \$159,410
E9–24. Req. 1 \$58,800 x 1.3605 = \$79,997 Req. 2 Savings account (+A). .....................................................

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Unformatted text preview: 58,800 Cash (-A). ..................................................................... 58,800 Req. 3 \$79,997 – \$58,800 = \$21,197 (time value of money or interest) Req. 4 December 31 2009 2010 Savings accounts (+A). ........................... 4,704 5,080 Interest revenue (+R, +SE). ................. 4,704 5,080 Computations: 2009: \$58,800 x 8% = \$4,704 . 2010: (\$58,800 + \$4,704) x 8% = \$5,080 . P9–11. Req. 1 Present value of debt: \$115,000 x 0.6227 = \$71,611 \$8,050 x 5.3893 = 43,384 \$114,995 Req. 2 Single sum to deposit: \$490,000 x .5820 = \$285,180 Interest revenue: \$490,000 - \$285,180 = \$204,820 Req. 3 Present value of payments: \$75,000 x 0.9346 = \$70,095 \$112,500 x 0.8734 = 98,258 \$150,000 x 0.8163 = 122,445 \$290,798 Req. 4 Equal annual payments on note payable: \$130,000 ÷ 4.1002 = \$31,706 Interest expense: (\$31,706 x 5) - \$130,000 = \$28,530...
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## This note was uploaded on 04/25/2010 for the course HADM 1121 taught by Professor Dittman during the Spring '07 term at Cornell University (Engineering School).

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Homework Session 17 Spring 2010 - 58,800 Cash (-A).

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