[QUESTION] [Problem 6.9]
James Kirk is a financial executive with McDowell Enterprises. Although James Kirk has not
had any formal training in finance or accounting, he has a good sense for numbers and has
helped the company grow from a very small company
[QUESTION] [Exercise 6.5]
Using the appropriate interest table, compute the present values of the following periodic
amounts due at the end of the designated periods.
(a) $30,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $3
[QUESTION] [BE 6.2]
Tony Bautista needs $25,000 in 4 years. What amount must he invest today if his investment
earns 12% compounded annually? What amount must he invest if his investment earns 12%
annual interest compounded quarterly?
[ANSWER]
12% annual
[QUESTION] [Exercise 6.3]
Using the appropriate interest table, answer each of the following questions. (Each case is
independent of the others.)
(a) What is the future value of $7,000 at the end of 5 periods at 8% compounded interest?
(b) What is the pre
[QUESTION] [Problem 6.10]
Dunn Inc. owns and operates a number of hardware stores in the New England region. Recently,
the company has decided to locate another store in a rapidly growing area of Maryland. The
company is trying to decide whether to purcha
[QUESTION] [Problem 6.8]
Ellison Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use
in its manufacturing process. After contacting the appropriate vendors, the purchasing
department received differing terms and optio
[QUESTION] [Exercise 6.10]
Consider the following independent situations.
(a) Mike Finley wishes to become a millionaire. His money market fund has a balance of
$92,296 and has a guaranteed interest rate of 10%. How many years must Mike leave that
balance
[QUESTION] [Exercise 6.12]
The Black Knights Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners,
would like to increase its market share in the Sunbelt. In order to do so, Black Knights has
decided to locate a new factory in the Pan
[QUESTION] [Exercise 6.2]
Alan Jackson invests $20,000 at 8% annual interest, leaving the money invested without
withdrawing any of the interest for 8 years. At the end of the 8 years,
Alan withdraws the accumulated amount of money.
Instructions
(a) Compu
[QUESTION] [Problem 6.11]
You have been hired as a benefit consultant by Jean Honore, the owner of Attic
Angels. She wants to establish a retirement plan for herself and her three employees. Jean has
provided the following information. The retirement plan
[QUESTION] [Exercise 6.8]
Clarence Weatherspoon, a super salesman contemplating retirement on his fifty-fifth birthday,
decides to create a fund on an 8% basis that will enable him to withdraw $20,000 per year on
June 30, beginning in 2018 and continuing
[QUESTION] [Exercise 6.4]
Using the appropriate interest table, answer the following questions. (Each case is independent of
the others).
(a) What is the future value of 20 periodic payments of $4,000 each made at the beginning of
each period and compound
[QUESTION] [BE 6.1]
Chris Spear invested $15,000 today in a fund that earns 8% compounded annually. To what
amount will the investment grow in 3 years? To what amount would the investment grow in 3
years if the fund earns 8% annual interest compounded sem
[QUESTION] [BE 6.10]
Henry Quincy wants to withdraw $30,000 each year for 10 years from a fund that earns 8%
interest. How much must he invest today if the first withdrawal is at year-end? How much must
he invest today if the first withdrawal takes place
[QUESTION] [Exercise 6.14]
Nerwin, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long
negotiation with the local labor union, the company decided to initiate a pension plan as a part of
its compensation plan. The plan will
[QUESTION] [Exercise 6.11]
Sosa Excavating Inc. is purchasing a bulldozer. The equipment has a price of $100,000. The
manufacturer has offered a payment plan that would allow Sosa to make 10 equal annual
payments of $16,274.53, with the first payment due
[QUESTION] [Exercise 6.9]
LEW Company purchased a machine at a price of $100,000 by signing a note payable, which
requires a single payment of $123,210 in 2 years. Assuming annual compounding of interest,
what rate of interest is being paid on the loan?
[
[QUESTION] [BE 6.14]
Amy Monroe wants to create a fund today that will enable her to withdraw $25,000 per year for
8 years, with the first withdrawal to take place 5 years from today. If the fund earns 8% interest,
how much must Amy invest today?
[ANSWER]
[QUESTION] [Exercise 6.6]
Presented below are three unrelated situations.
(a) Dwayne Wade Company recently signed a lease for a new office building, for a lease period
of 10 years. Under the lease agreement, a security deposit of $12,000 is made, with the
[QUESTION] [BE 6.5]
Sally Medavoy will invest $8,000 a year for 20 years in a fund that will earn 12% annual interest.
If the first payment into the fund occurs today, what amount will be in the fund in 20 years? If
the first payment occurs at year-end, w
[QUESTION] [Exercise 6.15]
Andrew Bogut just received a signing bonus of $1,000,000. His plan is to invest this payment in
a fund that will earn 8%, compounded annually.
Instructions
(a) If Bogut plans to establish the AB Foundation once the fund grows to
[QUESTION] [Exercise 6.19]
Assuming the same facts as those in E6-18 except that the payments must begin now and be
made on the first day of each of the 15 years, what payment method would you recommend?
[ANSWER]
Time diagram:
i = 8%
PVAD = ?
R=
$300,000
[QUESTION] [Exercise 6.13]
George Hincapie Inc. manufactures cycling equipment. Recently, the vice president of operations
of the company has requested construction of a new plant to meet the increasing demand for the
companys bikes. After a careful evalu
[QUESTION] [Problem 6.2]
Using the appropriate interest table, provide the solution to each of the following four questions
by computing the unknowns.
(a) What is the amount of the payments that Ned Winslow must make at the end of each of 8
years to accum
[QUESTION] [Exercise 6.16]
Jesper Parnevik borrowed $70,000 on March 1, 2012. This amount plus accrued interest at 12%
compounded semiannually is to be repaid March 1, 2022. To retire this debt, Jesper plans to
contribute to a debt retirement fund five eq
[QUESTION] [Problem 6.1]
Answer each of these unrelated questions.
(a) On January 1, 2014, Fishbone Corporation sold a building that cost $250,000 and that had
accumulated depreciation of $100,000 on the date of sale. Fishbone received as consideration a
[QUESTION] [Exercise 6.21]
Keith Bowie is trying to determine the amount to set aside so that he will have enough money on
hand in 2 years to overhaul the engine on his vintage used car. While there is some uncertainty
about the cost of engine overhauls i
[QUESTION] [Problem 6.7]
Answer the following questions related to Dubois Inc.
(a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative
uses of the funds. One alternative provides $80,000 at the end of each year for
[QUESTION] [Problem 6.5]
Julia Baker died, leaving to her husband Brent an insurance policy contract that provides that the
beneficiary (Brent) can choose any one of the following four options.
(a) $55,000 immediate cash.
(b) $4,000 every 3 months payable
[QUESTION] [Exercise 6.17]
Your client, Keith Moreland Leasing Company, is preparing a contract to lease a machine to
Souvenirs Corporation for a period of 25 years. Moreland has an investment cost of $365,755 in
the machine, which has a useful life of 25