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ACT_3391_Chp_6_Homework_Solutions

ACT_3391_Chp_6_Homework_Solutions - Intermediate Accounting...

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Intermediate Accounting I Amanda N. Paul, CPA, MBA Troy University

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Chapter 6 EXERCISE 6-1 (a) (b) 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 6-3 (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

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EXERCISE 6-6 (a)Future value of \$12,000 @ 10% for 10 years (\$12,000 X 2.59374) = \$31,124.88 (b) Future value of an ordinary annuity of \$600,000 at 10% for 15 years (\$600,000 X 31.77248) = \$19,063,488.00 Deficiency (\$20,000,000 – \$19,063,488) \$936,512.00
EXERCISE 6-6 continued (c) \$70,000 discounted at 8% for 10 years: \$70,000 X .46319 = \$32,423.30 Accept the bonus of \$40,000 now. (Also, consider whether the 8% is an appropriate discount rate since the president can probably earn compound interest at a higher rate without too much additional risk.)

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(a) \$50,000 X .31524 = \$15,762.00 + \$5,000 X 8.55948 = 42,797.40 \$58,559.40 (b) \$50,000 X .23939
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ACT_3391_Chp_6_Homework_Solutions - Intermediate Accounting...

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