# Spiceland chapter 06 26 topic compute the pv of an

• Notes
• shaker2412
• 157
• 93% (55) 51 out of 55 people found this document helpful

This preview shows page 72 - 79 out of 157 pages.

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?

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 157 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Spring
Professor
Benz,R.