1 Sonny Bono made an investment on August 1, 2011 which earned $9,000 one year later If the investment s rate of return was 8 , how much did Sonny invest $112,500 2 Patricia inherited $25,000 and invests this amount in an account that earns 4 interest per year compounded quarterly If her investment grows to $31,742 50, how long was the money left in the account 6 years 3 Randy just borrowed $21,999 85 to purchase a brand new car The contract calls for monthly payments of $730 71 for three years What is the annual interest rate for Randy s contract 12 4 Eddy Money signed a three year contract to host the Tonight Show Although he will receive $130 million dollars over three years, the terms of the contract are that he is to receive $10 million at the end of each of the next three years plus an additional $100 million at the end of the third year Assuming an annual interest rate of 10 , what is the actual value of Money s contract in today s dollars (Hint Think of the contact as two separate calculations) $99,999,000 5 Bobbi Simpson is evaluating different investment plans She has a choice of investing $10,000 at either 5 simple interest or 5 compound interest that is compounded annually What will be the difference between the total amounts of interest earned after two years $25,00 6 Amit is currently 28 years old and plans on retiring at age 59 His plan is to begin making annual withdrawals from his retirement account of $85,000 each year beginning on his 59th birthday and continuing until age 82, the average life span for a man Amit s age Which table should Amit use to determine the total amount he needs to have saved up by the time he turns 59 PV of an Annuity of $1 7 The Ramos family would like to go on an European vacation when their two children graduate from college in 5 years They can deposit $12,500 in an investment account today and they calculate that the vacation will cost a minimum of $20,300 in 5 years What is the minimum annual interest rate they must earn to achieve their goal of $20,300 if the interest is compounded semi annually 10 0 8 You landed a new Accounting job and decide that you can t show up at your clients in an old clunker, so you start looking for a new car to purchase El Monte Slim, the car salesmen, tells you that he can put you in a shiny new car for the low, low price of $618 per month for 3 years with a low interest rate of 12 What is the price of the car $18,606 9 What is the present value of $10,000 received twelve years from today, assuming an interest rate of 8 compounded semiannually $ 3,901 10 Betty Maksitt is saving for a retirement log cabin in West Virginia She is going to make 20 annual deposits of $5,000 each into an investment account beginning on July 1, 2012 Assuming an interest rate of 4 , on July 1, 2042, (the end of 20 years) Betty s investment account will have the following balance $148,891 For ACCT 2102 Homework Problems Chapter 11 12 Present Value of $1 Interest rate 1 4 5 8 10 12 of periods 2 9803 9246 9070 8573 8264 7972 3 9706 8890 8638 7938 7513 7118 10 9053 6756 6139 4632 3855 3220 12 8874 6246 5568 3971 3186 2567 20 8195 4564 3769 2145 1486 1037 24 7876 3901 3101 1577 1015 0659 36 6989 2437 1727 0626 0323 0169 Future Value of $1 interest rate 1 4 5 8 10 12 of periods 2 1 0201 1 0816 1 1025 1 1664 1 2100 1 2544 3 1 0303 1 1249 1 1576 1 2597 1 3310 1 4049 10 1 1046 1 4802 1 6289 2 1589 2 5937 3 1058 12 1 1268 1 6010 1 7959 2 5182 3 1384 3 8960 20 1 2202 2 1911 2 6533 4 6610 6 7275 9 6463 24 1 2697 2 5633 3 2251 6 3412 9 8497 15 1786 36 1 4308 4 1039 5 7918 15 9682 30 9127 59 1356 Present Value of an annuity of $1 interest rate 1 4 5 8 10 12 of periods 2 1 9704 1 8861 1 8594 1 7833 1 7355 1 6901 3 2 9410 2 7751 2 7232 2 5771 2 4869 2 4018 10 9 4713 8 1109 7 7217 6 7101 6 1446 5 6502 12 11 2551 9 3851 8 8633 7 5361 6 8137 6 1944 20 18 0456 13 5903 12 4622 9 8181 8 5136 7 4694 24 21 2434 15 2470 13 7986 10 5288 8 9847 7 7843 36 30 1075 18 9083 16 5469 11 7172 9 6765 8 1924 Future Value of an annuity of $1 interest rate 1 4 5 8 10 12 of periods 2 2 0100 2 0400 2 0500 2 0800 2 100 2 1200 3 3 0301 3 1216 3 1525 3 2464 3 3100 3 3744 10 10 4622 12 0061 12 5779 14 4866 15 9374 17 5487 12 12 6825 15 0258 15 9171 18 9771 21 3843 24 1331 20 22 0190 29 7781 33 0660 45 7620 57 2750 72 0524 24 26 9735 39 0826 44 5020 66 7648 88 4973 118 1552 36 43 0769 77 5983 95 8363 187 1021 299 1268 484 4631 ACCT 2102 Homework Problems Chapter 11 1 Sonny Bono made an investment on August 1, 2011 which earned $9,000 one year later If the investment's rate of return was 8 , how much did Sonny invest $112,500 2 Patricia inherited $25,000 and invests this amount in an account that earns 4 interest per year compounded quarterly If her investment grows to $31,742 50, how long was the money left in the account 6 years 3 Randy just borrowed $21,999 85 to purchase a brand new car The contract calls for monthly payments of $730 71 for three years What is the annual interest rate for Randy's contract 12 4 Eddy Money signed a three year contract to host the Tonight Show Although he will receive $130 million dollars over three years, the terms of the contract are that he is to receive $10 million at the end of each of the next three years plus an additional $100 million at the end of the third year Assuming an annual interest rate of 10 , what is the actual value of Money's contract in today's dollars (Hint Think of the contact as two separate calculations) $99,999,000 5 Bobbi Simpson is evaluating different investment plans She has a choice of investing $10,000 at either 5 simple interest or 5 compound interest that is compounded annually What will be the difference between the total amounts of interest earned after two years $25,00 6 Amit is currently 28 years old and plans on retiring at age 59 His plan is to begin making annual withdrawals from his retirement account of $85,000 each year beginning on his 59 th birthday and continuing until age 82, the average life span for a man Amit's age Which table should Amit use to determine the total amount he needs to have saved up by the time he turns 59 PV of an Annuity of $1 7 The Ramos family would like to go on an European vacation when their two children graduate from college in 5 years They can deposit $12,500 in an investment account today and they calculate that the vacation will cost a minimum of $20,300 in 5 years What is the minimum annual interest rate they must earn to achieve their goal of $20,300 if the interest is compounded semi annually 10 0 8 You landed a new Accounting job and decide that you can't show up at your clients in an old clunker, so you start looking for a new car to purchase El Monte Slim, the car salesmen, tells you that he can put you in a shiny new car for the low, low price of $618 per month for 3 years with a low interest rate of 12 What is the price of the car $18,606 9 What is the present value of $10,000 received twelve years from today, assuming an interest rate of 8 compounded semiannually $ 3,901 10 Betty Maksitt is saving for a retirement log cabin in West Virginia She is going to make 20 annual deposits of $5,000 each into an investment account beginning on July 1, 2012 Assuming an interest rate of 4 , on July 1, 2042, (the end of 20 years) Betty's investment account will have the following balance $148,891 For ACCT 2102 Homework Problems Chapter 11 12 1 of periods 2 3 10 12 20 24 36 8 10 12 8573 7938 4632 3971 2145 1577 0626 8264 7513 3855 3186 1486 1015 0323 7972 7118 3220 2567 1037 0659 0169 8 10 12 1 0201 1 0816 1 1025 1 1664 1 0303 1 1249 1 1576 1 2597 1 1046 1 4802 1 6289 2 1589 1 1268 1 6010 1 7959 2 5182 1 2202 2 1911 2 6533 4 6610 1 2697 2 5633 3 2251 6 3412 1 4308 4 1039 5 7918 15 9682 Present Value of an annuity of $1 interest rate 1 4 5 8 1 2100 1 3310 2 5937 3 1384 6 7275 9 8497 30 9127 1 2544 1 4049 3 1058 3 8960 9 6463 15 1786 59 1356 10 12 1 9704 1 8861 1 8594 1 7833 2 9410 2 7751 2 7232 2 5771 9 4713 8 1109 7 7217 6 7101 11 2551 9 3851 8 8633 7 5361 18 0456 13 5903 12 4622 9 8181 21 2434 15 2470 13 7986 10 5288 30 1075 18 9083 16 5469 11 7172 Future Value of an annuity of $1 interest rate 1 4 5 8 1 7355 2 4869 6 1446 6 8137 8 5136 8 9847 9 6765 1 6901 2 4018 5 6502 6 1944 7 4694 7 7843 8 1924 10 12 2 100 3 3100 15 9374 21 3843 57 2750 88 4973 299 1268 2 1200 3 3744 17 5487 24 1331 72 0524 118 1552 484 4631 9803 9706 9053 8874 8195 7876 6989 1 of periods 2 3 10 12 20 24 36 of periods 2 3 10 12 20 24 36 of periods 2 3 10 12 20 24 36 Present Value of $1 Interest rate 4 5 2 0100 3 0301 10 4622 12 6825 22 0190 26 9735 43 0769 9246 9070 8890 8638 6756 6139 6246 5568 4564 3769 3901 3101 2437 1727 Future Value of $1 interest rate 4 5 2 0400 3 1216 12 0061 15 0258 29 7781 39 0826 77 5983 2 0500 3 1525 12 5779 15 9171 33 0660 44 5020 95 8363 2 0800 3 2464 14 4866 18 9771 45 7620 66 7648 187 1021

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1. Sonny Bono made an investment on August 1, 2011 which earned $9,000 one year later. If the investment?s rate of return was 8%, how

1. Sonny Bono made an investment on August 1, 2011 which earned $9,000 one year later. If the investment?s rate of return was 8%, how much did Sonny invest? $112,500 2. Patricia inherited $25,000 and invests this amount in an account that earns 4% interest per year compounded quarterly. If her investment grows to $31,742.50, how long was the money left in the account? 6 years 3. Randy just borrowed $21,999.85 to purchase a brand new car. The contract calls for monthly payments of $730.71 for three years. What is the annual interest rate for Randy?s contract? 12% 4. Eddy Money signed a three-year contract to host the Tonight Show. Although he will receive $130 million dollars over three years, the terms of the contract are that he is to receive $10 million at the end of each of the next three years plus an additional $100 million at the end of the third year. Assuming an annual interest rate of 10%, what is the actual value of Money?s contract in today?s dollars? (Hint: Think of the contact as two separate calculations) $99,999,000 5. Bobbi Simpson is evaluating different investment plans. She has a choice of investing $10,000 at either 5% simple interest or 5% compound interest that is compounded annually. What will be the difference between the total amounts of interest earned after two years? $25,00 6. Amit is currently 28 years old and plans on retiring at age 59. His plan is to begin making annual withdrawals from his retirement account of $85,000 each year beginning on his 59th birthday and continuing until age 82, the average life span for a man Amit?s age. Which table should Amit use to determine the total amount he needs to have saved up by the time he turns 59? PV of an Annuity of $1 7. The Ramos family would like to go on an European vacation when their two children graduate from college in 5 years. They can deposit $12,500 in an investment account today and they calculate that the vacation will cost a minimum of $20,300 in 5 years. What is the minimum annual interest rate they must earn to achieve their goal of $20,300 if the interest is compounded semi-annually? 10.0% 8. You landed a new Accounting job and decide that you can?t show up at your clients in an old clunker, so you start looking for a new car to purchase. El Monte Slim, the car salesmen, tells you that he can put you in a shiny new car for the low, low price of $618 per month for 3 years with a low interest rate of 12%. What is the price of the car? $18,606 9. What is the present value of $10,000 received twelve years from today, assuming an interest rate of 8% compounded semiannually? $ 3,901 10. Betty Maksitt is saving for a retirement log cabin in West Virginia. She is going to make 20 annual deposits of $5,000 each into an investment account beginning on July 1, 2012. Assuming an interest rate of 4%, on July 1, 2042, (the end of 20 years) Betty?s investment account will have the following balance: $148,891 For ACCT 2102 Homework Problems: Chapter 11 & 12 Present Value of $1: Interest rate 1% 4% 5% 8% 10% 12% # of periods 2 .9803 .9246 .9070 .8573 .8264 .7972 3 .9706 .8890 .8638 .7938 .7513 .7118 10 .9053 .6756 .6139 .4632 .3855 .3220 12 .8874 .6246 .5568 .3971 .3186 .2567 20 .8195 .4564 .3769 .2145 .1486 .1037 24 .7876 .3901 .3101 .1577 .1015 .0659 36 .6989 .2437 .1727 .0626 .0323 .0169 Future Value of $1: interest rate 1% 4% 5% 8% 10% 12% # of periods 2 1.0201 1.0816 1.1025 1.1664 1.2100 1.2544 3 1.0303 1.1249 1.1576 1.2597 1.3310 1.4049 10 1.1046 1.4802 1.6289 2.1589 2.5937 3.1058 12 1.1268 1.6010 1.7959 2.5182 3.1384 3.8960 20 1.2202 2.1911 2.6533 4.6610 6.7275 9.6463 24 1.2697 2.5633 3.2251 6.3412 9.8497 15.1786 36 1.4308 4.1039 5.7918 15.9682 30.9127 59.1356 Present Value of an annuity of $1: interest rate 1% 4% 5% 8% 10% 12% # of periods 2 1.9704 1.8861 1.8594 1.7833 1.7355 1.6901 3 2.9410 2.7751 2.7232 2.5771 2.4869 2.4018 10 9.4713 8.1109 7.7217 6.7101 6.1446 5.6502 12 11.2551 9.3851 8.8633 7.5361 6.8137 6.1944 20 18.0456 13.5903 12.4622 9.8181 8.5136 7.4694 24 21.2434 15.2470 13.7986 10.5288 8.9847 7.7843 36 30.1075 18.9083 16.5469 11.7172 9.6765 8.1924 Future Value of an annuity of $1: interest rate 1% 4% 5% 8% 10% 12% # of periods 2 2.0100 2.0400 2.0500 2.0800 2.100 2.1200 3 3.0301 3.1216 3.1525 3.2464 3.3100 3.3744 10 10.4622 12.0061 12.5779 14.4866 15.9374 17.5487 12 12.6825 15.0258 15.9171 18.9771 21.3843 24.1331 20 22.0190 29.7781 33.0660 45.7620 57.2750 72.0524 24 26.9735 39.0826 44.5020 66.7648 88.4973 118.1552 36 43.0769 77.5983 95.8363 187.1021 299.1268 484.4631 image text in transcribed

ACCT 2102 Homework Problems: Chapter 11 1. Sonny Bono made an investment on August 1, 2011 which earned $9,000 one year later. If the investment's rate of return was 8%, how much did Sonny invest? $112,500 2. Patricia inherited $25,000 and invests this amount in an account that earns 4% interest per year compounded quarterly. If her investment grows to $31,742.50, how long was the money left in the account? 6 years 3. Randy just borrowed $21,999.85 to purchase a brand new car. The contract calls for monthly payments of $730.71 for three years. What is the annual interest rate for Randy's contract? 12% 4. Eddy Money signed a three-year contract to host the Tonight Show. Although he will receive $130 million dollars over three years, the terms of the contract are that he is to receive $10 million at the end of each of the next three years plus an additional $100 million at the end of the third year. Assuming an annual interest rate of 10%, what is the actual value of Money's contract in today's dollars? (Hint: Think of the contact as two separate calculations) $99,999,000 5. Bobbi Simpson is evaluating different investment plans. She has a choice of investing $10,000 at either 5% simple interest or 5% compound interest that is compounded annually. What will be the difference between the total amounts of interest earned after two years? $25,00 6. Amit is currently 28 years old and plans on retiring at age 59. His plan is to begin making annual withdrawals from his retirement account of $85,000 each year beginning on his 59 th birthday and continuing until age 82, the average life span for a man Amit's age. Which table should Amit use to determine the total amount he needs to have saved up by the time he turns 59? PV of an Annuity of $1 7. The Ramos family would like to go on an European vacation when their two children graduate from college in 5 years. They can deposit $12,500 in an investment account today and they calculate that the vacation will cost a minimum of $20,300 in 5 years. What is the minimum annual interest rate they must earn to achieve their goal of $20,300 if the interest is compounded semi-annually? 10.0% 8. You landed a new Accounting job and decide that you can't show up at your clients in an old clunker, so you start looking for a new car to purchase. El Monte Slim, the car salesmen, tells you that he can put you in a shiny new car for the low, low price of $618 per month for 3 years with a low interest rate of 12%. What is the price of the car? $18,606 9. What is the present value of $10,000 received twelve years from today, assuming an interest rate of 8% compounded semiannually? $ 3,901 10. Betty Maksitt is saving for a retirement log cabin in West Virginia. She is going to make 20 annual deposits of $5,000 each into an investment account beginning on July 1, 2012. Assuming an interest rate of 4%, on July 1, 2042, (the end of 20 years) Betty's investment account will have the following balance: $148,891 For ACCT 2102 Homework Problems: Chapter 11 & 12 1% # of periods 2 3 10 12 20 24 36 8% 10% 12% .8573 .7938 .4632 .3971 .2145 .1577 .0626 .8264 .7513 .3855 .3186 .1486 .1015 .0323 .7972 .7118 .3220 .2567 .1037 .0659 .0169 8% 10% 12% 1.0201 1.0816 1.1025 1.1664 1.0303 1.1249 1.1576 1.2597 1.1046 1.4802 1.6289 2.1589 1.1268 1.6010 1.7959 2.5182 1.2202 2.1911 2.6533 4.6610 1.2697 2.5633 3.2251 6.3412 1.4308 4.1039 5.7918 15.9682 Present Value of an annuity of $1: interest rate 1% 4% 5% 8% 1.2100 1.3310 2.5937 3.1384 6.7275 9.8497 30.9127 1.2544 1.4049 3.1058 3.8960 9.6463 15.1786 59.1356 10% 12% 1.9704 1.8861 1.8594 1.7833 2.9410 2.7751 2.7232 2.5771 9.4713 8.1109 7.7217 6.7101 11.2551 9.3851 8.8633 7.5361 18.0456 13.5903 12.4622 9.8181 21.2434 15.2470 13.7986 10.5288 30.1075 18.9083 16.5469 11.7172 Future Value of an annuity of $1: interest rate 1% 4% 5% 8% 1.7355 2.4869 6.1446 6.8137 8.5136 8.9847 9.6765 1.6901 2.4018 5.6502 6.1944 7.4694 7.7843 8.1924 10% 12% 2.100 3.3100 15.9374 21.3843 57.2750 88.4973 299.1268 2.1200 3.3744 17.5487 24.1331 72.0524 118.1552 484.4631 .9803 .9706 .9053 .8874 .8195 .7876 .6989 1% # of periods 2 3 10 12 20 24 36 # of periods 2 3 10 12 20 24 36 # of periods 2 3 10 12 20 24 36 Present Value of $1: Interest rate 4% 5% 2.0100 3.0301 10.4622 12.6825 22.0190 26.9735 43.0769 .9246 .9070 .8890 .8638 .6756 .6139 .6246 .5568 .4564 .3769 .3901 .3101 .2437 .1727 Future Value of $1: interest rate 4% 5% 2.0400 3.1216 12.0061 15.0258 29.7781 39.0826 77.5983 2.0500 3.1525 12.5779 15.9171 33.0660 44.5020 95.8363 2.0800 3.2464 14.4866 18.9771 45.7620 66.7648 187.1021