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Answers to Assignment 4(1)

Answers to Assignment 4(1) - The University of Texas at...

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The University of Texas at Austin McCombs School of Business, Business Foundations Program ACC 310F: Foundations of Accounting Answers to Assignment 4 Part A 1. Welz Company is considering investing in an annuity contract that will return $25,000 annually at the end of each year for 25 years. What amount should Welz Company pay for the investment if it earns a 8% return? 266,875 2. You plan on buying a new home in four years and want to have a $15,000 down payment at that time. Your bank pays interest at a rate of 6 percent. How much should you deposit today to reach your goal for your house down payment? 11,880 3. A potential customer asked your lemonade company to help cater an upcoming event by providing beverages for 50 guests (2 cups per guest); the customer offers to pay you $30. You plan on using a “4, 2, 2” recipe which produces 12 cups per pitcher. If the catered event will not interfere with your regular lemonade business, what amount of net income would you expect from the event?
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