Spiceland - Chapter 06 #26Topic: Compute the PV of an ordinary annuity, an annuity due, and a deferred annuity

27.Rosie's Florist borrows $300,000 to be paid off in six years. The loan payments aresemiannual with the first payment due in six months, and interest is at 6%. What is the amountof each payment?A.$25,750.B.$29,761.C.$30,139.D.$25,500.$300,000 ÷ 9.95400* =$30,139*PVA of $1: n = 12; i = 3%AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 3 HardLearning Objective: 06-08 Solve for unknown values in annuity situations involving present value.Spiceland - Chapter 06 #27Topic: Using the PV of an annuity, solve for unknown values

28.Jimmy has $255,906 accumulated in a 401K plan. The fund is earning a low, but safe, 3% peryear. The withdrawals will take place at the end of each year starting a year from now. Howsoon will the fund be exhausted if Jimmy withdraws $30,000 each year?A.11 years.B.10 years.C.8.5 years.D.8.8 years.$255,906 ÷ $30,000 = 8.5302For PVA of $1 factor of 8.5302 and i of 3%, n = 10AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 3 HardLearning Objective: 06-08 Solve for unknown values in annuity situations involving present value.Spiceland - Chapter 06 #28Topic: Using the PV of an annuity, solve for unknown values

29.Debbie has $368,882 accumulated in a 401K plan. The fund is earning a low, but safe, 3% peryear. The withdrawals will take place annually starting today. How soon will the fund beexhausted if Debbie withdraws $30,000 each year?A.15 years.B.16 years.C.14 years.D.12.3 years.$368,882 ÷ $30,000 = 12.29607For PVAD of $1 factor of 12.29607 and i of 3%, n = 15AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 3 HardLearning Objective: 06-08 Solve for unknown values in annuity situations involving present value.Spiceland - Chapter 06 #29Topic: Using the PV of an annuity, solve for unknown values

30.Jose wants to cash in his winning lottery ticket. He can either receive five $5,000 annualpayments starting today, or he can receive a lump-sum payment now based on a 3% annualinterest rate. What would be the lump-sum payment?A.$23,586.B.$22,899.C.$21,565.D.$23,000.PVAD = $5,000 x 4.71710* = $23,586*PVAD of $1: n = 5; i = 3%AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 2 MediumLearning Objective: 06-07 Compute the present value of an ordinary annuity; an annuity due; and a deferred annuity.Spiceland - Chapter 06 #30Topic: Compute PV of an ordinary annuity, an annuity due, and a deferred annuity

31.Micro Brewery borrows $300,000 to be paid off in three years. The loan payments aresemiannual with the first payment due in six months, and interest is at 6%. What is the amountof each payment?A.$55,379.B.$106,059.C.$30,138.D.$60,276.$300,000 ÷ 5.41719* =$55,379*PVA of $1: n = 6; i = 3%AACSB: AnalyticAICPA FN: MeasurementBlooms: ApplyDifficulty: 3 HardLearning Objective: 06-08 Solve for unknown values in annuity situations involving present value.Spiceland - Chapter 06 #31Topic: Using the PV of an annuity, solve for unknown values

32.A firm leases equipment under a capital lease (analogous to an installment purchase) thatcalls for 12 semiannual payments of $39,014.40. The first payment is due at the inception ofthe lease. The annual rate on the lease is 6%. What is the value of the leased asset atinception of the lease?

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