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INTERMEDIATE ACCT CHP 6
Exercise 61 Future value; single amount [LO2]
Determine the future value of the following single amounts (Use
Table 1
)
(Round "FV
Factor" to 5 decimal places and final answers to the nearest dollar amount. Omit the "$"
sign in your response.)
:
Investe
d
Amoun
t
Interest
Rate
No. of
Periods
Future Value
1.
$ 13,000
5%
9
$
2.
11,000
8
13
$
3.
29,000
10
16
$
4.
59,000
5
12
$
Explanation:
1. FV = $13,000 (1.55133*) = $20,167
*Future value of $1: n = 9, i = 5% (from Table 1)
2. FV = $11,000 (2.71962*) = $29,916
*Future value of $1: n = 13, i = 8% (from Table 1)
3. FV = $29,000 (4.59497*) = $133,254
*Future value of $1: n = 16, i = 10% (from Table 1)
4. FV = $59,000 (1.79586*) = $105,956
*Future value of $1: n = 12, i = 5% (from Table 1)
Exercise 63 Present value; single amount [LO3]
Determine the present value of the following single amounts (Use
Table 2
)
(Round "PV
Factor" to 5 decimal places and final answers to the nearest dollar amount. Omit the "$"
sign in your response)
:
Futur
e
Amo
unt
Inter
est
Rate
No.
of
Perio
ds
Present Value
1.
$20,00
7%
10
$
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2.
14,00
0
8
12
$
3.
25,00
0
12
20
$
4.
40,00
0
10
8
$
Explanation:
1. PV = $20,000 (.50835*) = $10,167
*Present value of $1: n = 10, i = 7% (from Table 2)
2. PV = $14,000 (.39711*) = $5,560
*Present value of $1: n = 12, i = 8% (from Table 2)
3. PV = $25,000 (.10367*) = $2,592
*Present value of $1: n = 20, i = 12% (from Table 2)
4. PV = $40,000 (.46651*) = $18,660
*Present value of $1: n = 8, i = 10% (from Table 2)
Exercise 610 Future value; solving for annuities and single amount [LO4, 8]
John Rider wants to accumulate $100,000 to be used for his daughter’s college education. He
would like to have the amount available on December 31, 2016. Assume that the funds will
accumulate in a certificate of deposit paying 8% interest compounded annually.
Answer each of the following independent questions.
Required:
(1
)
If John were to deposit a single amount, how much would he have to invest on December 31,
2011? (Use
Table 2
)
(Round "PV Factor" to 5 decimal places and final answer to the
nearest dollar amount. Omit the "$" sign in your response.)
PV
$
(2
)
If John were to make five equal deposits on each December 31, beginning on December 31,
2012, what is the required deposit? (Use
Table 3
)
(Round "FV Factor" to 4 decimal places
and final answer to the nearest dollar amount.Omit the "$" sign in your response.)
Annuity
amount
$
(3
)
If John were to make five equal deposits on each December 31, beginning on December 31,
2011, what is the required deposit? (Use
Table 5
)
(Round "FV Factor" to 4 decimal places
and final answer to the nearest dollar amount.Omit the "$" sign in your response.)
Annuity
amount
$
Explanation:
(1)
PV = $100,000 (.68058*) = $68,058
*Present value of $1: n = 5, i = 8% (from Table 2)
(2)
Annuity
amount =
$100,000
5.8666*
*Future value of an ordinary annuity of $1: n = 5, i = 8% (from Table 3)
Annuity amount = $17,046
(3)
Annuity
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 Spring '12
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