a) Compute the amount that a $48,000 investment today would accumulate at 12% (compound interest) by the end of 4 years.

b) Tom wants to retire at the end of this year (2017). His life expectancy is 17 years from his retirement. Tom has come to you, his CPA, to learn how much he should deposit on December 31, 2017 to be able to withdraw $54,000 at the end of each year for the next 17 years, assuming the amount on deposit will earn 9% interest annually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Judy Thomas has a $2,800 overdue debt for medical books and supplies at Joe's Bookstore. She has only $650 in her checking account and doesn't want her parents to know about this debt. Joe's tells her that she may settle the account in one of two ways since she can't pay it all now:

1. Pay $650 now and $1,620 when she completes her residency, 4 years from today.

2. Pay $2,800 one year after completion of residency, 2 years from today. a) Assuming that the cost of money is the only factor in Judy's decision and that the cost of money to her is 5%, which alternative should she choose? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.) (Use the below table.)

b) Present Value of Alternative 1 $

Present Value of Alternative 2 $

On the present value basis, is preferable. Alternative 1 or Alternative 2

Jill Morris is presently leasing a small business computer from Eller Office Equipment Company. The lease requires 14 annual payments of $13,000 at the end of each year and provides the lessor (Eller) with an 9% return on its investment. You may use the following 9% interest factors:

10 Periods 14 Periods 16 Periods

Future Value of 1 2.36736 3.34173 3.97031

Present Value of 1 0.42241 0.29925 0.25187

Future Value of Ordinary Annuity of 1 15.19293 26.01919 33.00340

Present Value of Ordinary Annuity of 1 6.41766 7.78615 8.31256

Present Value of an Annuity Due of 1 6.99525 8.48690 9.06069

Assuming the computer has a ten-year life and will have no salvage value at the expiration of the lease, what was the original cost of the computer to Eller? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Original Cost $ Don't show me this message again for the assignment

What amount would each payment be if the 14 annual payments are to be made at the beginning of each period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Each payment $