Khalil_Nancy_5 - borrowed the money from a local bank. On...

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Time Value of Money – Assignment 5 Remember to save the file with your answers and name the file with your last name and first name and upload it under Assignments. 1. You want to buy a new car when your current vehicle wears out in about four years. You can afford to set aside $4,200 at the end of each year for the next four years. How much will you have at the end of four years if you can earn 6% on your savings? 2. If you need $18,000 to go on a round-the-world cruise five years from now, how much would you have to deposit in the bank today at 4% interest to get the needed amount? 3. Johnson Products has signed a contract to purchase equipment. The contract requires Johnson to pay $5,000 at the end of each quarter for the next two years. Because Johnson is a relatively risky company, it would have to pay 12% annual interest if it
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Unformatted text preview: borrowed the money from a local bank. On the acquisition date, at what amount should the new asset be valued on the Johnson Products balance sheet. 4. On January 1, 2010, True Tech Inc. sold the rights to use one of its patents that will result in the receipt of royalties of $3,500 over the next 5 years and a lump sum receipt of $6,000 at the end of the sixth year. The first royalty is to be received starting December 31, 2010. What is the total present value of these payments if interest is at 8%. 5. Simon borrowed $80,000 from a local bank. The loan requires Simon to pay 10 annual installments beginning one year from today. Assuming an interest rate of 7%, what is the amount of each annual installment payment?...
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This note was uploaded on 10/25/2011 for the course ACG 3341 taught by Professor Jomosankara during the Spring '09 term at FAU.

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Khalil_Nancy_5 - borrowed the money from a local bank. On...

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