INTERMEDIATE ACCT CHP 6

# INTERMEDIATE ACCT CHP 6 - INTERMEDIATE ACCT CHP 6 Exercise...

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INTERMEDIATE ACCT CHP 6 Exercise 6-1 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 6-3 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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0 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 6-10 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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INTERMEDIATE ACCT CHP 6 - INTERMEDIATE ACCT CHP 6 Exercise...

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