{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

34) Managerial Financial Accounting Assignments AE9-7 Solution

34) Managerial Financial Accounting Assignments AE9-7 Solution

This preview shows pages 1–4. Sign up to view the full content.

AE9-7 Calculate Present Value [LO 2] Juanita Martinez is ready to retire and has a choice of three pension plans. Plan A provides for an immediate cash payment of \$225,000. Plan B provides for the payment of \$22,500 per year for 10 years and the payment of \$225,000 at the end of year 10. Plan C will pay \$45,000 per year for 10 years. Juanita Martinez desires a return of 10 percent.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Determine the present value of each plan. (Round present value factor calculations to 4

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: decimal places, e.g. 0.2525. Round all other calculations and final answer to 0 decimal places, e.g. 5,250.) Present Value Plan A \$ 225,000 Plan B \$ 131,307.75 Plan C \$ 525,231. Plan A Total \$225,00 Plan B Cash Flow Present Value Factor Total \$22,500 6.1446 \$138,25 4 225,000 0.3855 86,738 \$224,99 2 Plan C Select the best plan. Plan B Click here if you would like to Show Work for this question AE9-7 Plan A should be selected as it has the highest present value....
View Full Document

{[ snackBarMessage ]}

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern