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10. MC030 (Points: 5) On June 1, 2006, Walsh Company sold some equipment to Fischer Company. The two companies entered into an installment sales contract
10. MC030 (Points: 5) On June 1, 2006, Walsh Company sold some equipment to Fischer Company. The two companies entered into an installment sales contract at a rate of 8%. The contract required 8 equal annual payments with the first payment due on June 1, 2006. What type of compound interest table is appropriate for this situation? a. Present value of an annuity due of 1 table. b. Present value of an ordinary annuity of 1 table. c. Future amount of an ordinary annuity of 1 table. d. Future amount of 1 table. 13. MC031 (Points: 5) Which of the following transactions would best use the present value of an annuity due of 1 table? a. Diamond Bar, Inc. rents a truck for 5 years with annual rental payments of $20,000 to be made at the beginning of each year. b. Michener Co. rents a warehouse for 7 years with annual rental payments of $120,000 to be made at the end of each year. c. Durant, Inc. borrows $20,000 and has agreed to pay back the principal plus interest in three years. d. Babbitt, Inc. wants to deposit a lump sum to accumulate $50,000 for the construction of a new parking lot in 4 years. 16. MC057 (Points: 5) Windsor Company will receive $100,000 in 7 years. If the appropriate interest rate is 10%, the present value of the $100,000 receipt is a. $51,000. b. $51,316. c. $151,000. d. $194,872. Save Answer 17. MC041 (Points: 5) Which statement is false? a. The factor for the future value of an annuity due is found by multiplying the ordinary annuity table value by one plus the interest rate. b. The factor for the present value of an annuity due is found by multiplying the ordinary annuity table value by one minus the interest rate. c. The factor for the future value of an annuity due is found by subtracting 1.00000 from the ordinary annuity table value for one more period. d. The factor for the present value of an annuity due is found by adding 1.00000 to the ordinary annuity table value for one less period. 18. MC085 (Points: 5) On May 1, 2007, a company purchased a new machine which it does not have to pay for until May 1, 2009. The total payment on May 1, 2009 will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine would be the total payment multiplied by what time value of money factor? a. Future value of annuity of 1 b. Future value of 1 c. Present value of annuity of 1 d. Present value of 1 Save Answer 19. MC038 (Points: 5) Which of the following statements is true? a. The higher the discount rate, the higher the present value. b. The process of accumulating interest on interest is referred to as discounting. c. If money is worth 10% compounded annually, $1,100 due one year from today is equivalent to $1,000 today. d. If a single sum is due on December 31, 2010, the present value of that sum decreases as the date draws closer to December 31, 2010. 20. MC077 (Points: 5) How much must be invested now to receive $10,000 for 15 years if the first $10,000 is received today and the rate is 9%? Present Value of PeriodsOrdinary Annuity at 9% 147.78615 158.06069 168.31256 a. $80,607 b. $87,862 c. $150,000 d. $73,125
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