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
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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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