ACC 210PAppendix3

ACC 210PAppendix3 - $20,000 annually at the end of each...

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ACC 210P Appendix 3 1. Joe Story deposited $2,000 in an account paying interest of 5% compounded annually. What amount would be in the account at the end of 4 years? 2. Dross Company has decided to begin accumulating a fund for plant expansion. The company deposited $10,000 in a fund on January 2, 2003. Dross will also deposit $5,000 annually at the end of each year, starting in 2003. The fund pays interest at 5% compounded annually. What is the balance of the fund at the end of 2007 (after the 2007 deposit)? 3. (a) What is the present value of $30,000 due 7 years from now, discounted at 8%? (b) What is the present value of $50,000 due 5 years from now, discounted at 15%? 4. If Rachel Purcell invests $14,962.50 now, she will receive $50,000 at the end of 14 years. What annual rate of return will Rachel earn on her investment?
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5. Raymond Company is considering investing in an annuity contract that will return
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Unformatted text preview: $20,000 annually at the end of each year for 20 years. What amount should Raymond Company pay for this investment if it earns a 6% return? 6. Laurie Bassmore purchased an investment for $9,818.15. From this investment, she will receive $1,000 annually for the next 20 years starting one year from now. What rate of interest will Laurie be earning on her investment? 7. Purnell Company issued $400,000, 10%, 2-year bonds that pay interest semi-annually. Compute the amount at which the bonds would sell if investors required a rate of return of 8%. 8. Torrie Company borrowed $50,000 on January 2, 2007. This amount plus accrued interest of 5% compounded annually will be repaid at the end of 3 years. What amount will Torrie repay at the end of the third year?...
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This note was uploaded on 03/10/2011 for the course ACC 210 taught by Professor Staff during the Spring '07 term at N.C. State.

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ACC 210PAppendix3 - $20,000 annually at the end of each...

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