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ACCT 382 - Week 6 - Chapter 6 Homework

ACCT 382 - Week 6 - Chapter 6 Homework
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ACCT 382 - Week 6 - Chapter 6 Homework

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Question 1

Determine the future value of the following single amounts (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1and PVAD of $1(Use appropriate factor(s) from the tables provided.):

 
 

Invested Amount

i =

n =

Future Value

1.

$15,000

 

12

+/-0.1%$30,183

2.

$20,000

 

10

+/-0.1%$43,178

3.

$30,000

 

20

+/-0.1%$289,389

4.

$50,000

 

12

+/-0.1%$80,052

 

Question 2

Determine the present value of the following single amounts (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.):

 
 

Future Amount

i =

n =

Present Value

1.

$20,000

 

10

+/-0.1%$10,167

2.

$14,000

 

12

+/-0.1%$5,560

3.

$25,000

 

20

+/-0.1%$2,592

4.

$40,000

 

8

+/-0.1%$18,660

 

 

Question 3

Determine the combined present value as of December 31, 2013, of the following four payments to be received at the end of each of the designated years, assuming an annual interest rate of 8%. (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.)

  

Payment

Year Received

$

5,000

 

2014

 

 

6,000

 

2015

 

 

8,000

 

2017

 

 

9,000

 

2019

 


 

 

Question 4

The Field Detergent Company sold merchandise to the Abel Company on June 30, 2013. Payment was made in the form of a noninterest-bearing note requiring Abel to pay $85,000 on June 30, 2015. Assume that a 10% interest rate properly reflects the time value of money in this situation. (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.)

 

 

Question 5

Wiseman Video plans to make four annual deposits of $2,000 each to a special building fund. The fund’s assets will be invested in mortgage instruments expected to pay interest at 12% on the fund’s balance. (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.)

 

 

Question 6

Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2013, of a five-period annual annuity of $5,000 under each of the following situations (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.)

 

 

Question 7

Answer each of the following independent questions.

Required:

Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2) $20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuity of $13,000 beginning one year from today. (FV of $1PV of $1,FVA of $1PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.)

 

Question 8

Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2013. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $5,000 on each September 30, beginning on September 30, 2016. (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1and PVAD of $1(Use appropriate factor(s) from the tables provided.)

 Required:

Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2013, assuming that an interest rate of 10% properly reflects the time value of money in this situation.

 

 

 

Amount recorded

+/-0.1%

 

Question 9

The San Fillipo Corporation issued 8% stated rate bonds with a face amount of $300 million. The bonds mature on September 30, 2033 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. (FV of $1PV of $1FVA of $1,PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.)

 

Required:

Determine the price of the bonds on September 30, 2013. (Enter your answers in whole dollars.)

 

 

 

 

Table values are based on:

n =

40

 

i =

5%

 

Cash Flow

Amount

Present Value

Interest

 

+/-0.001%$205,909,080

Principal

 

+/-0.3%42,615,000

Price of bonds

+/-0.3%

 

 

Question 10

On June 30, 2013, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2028 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2013. (FV of $1PV of $1FVA of $1PVA of $1FVAD of $1 and PVAD of $1(Use appropriate factor(s) from the tables provided.