Accounting Managerial

1.

Gloria Ammon has just won the state lottery and has the following three payout options for after - tax prize money: 1. $50,000 per year at the end of each of the next six years 2. $304,000 (lump sum) now 3. $500,000 (lump sum) six years from now The annual discount rate is 9%. Compute the present value of the third option. (Round to nearest whole dollar.) Present value of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 0.857 0.842 0.826 3 0.794 0.772 0.751 4 0.735 0.708 0.633 5 0.631 0.650 0.621 6 0.630 0.596 0.564 7 0.533 0.547 0.513 o A. $254,000 0 B. $79,467 0 0. $293,000 0 D. $76,667 Assume you invest $14,000 today. How much will you have in four years at an interest rate of 8%? Future Value of $1: 8% 9% 10% 1.080 1.090 1.100 1. 166 1.188 1.210 1.260 1.295 1.331 O U A W N - 1.360 1.412 1.464 1.469 1.539 1.611 1.587 1.677 1.772 . . . . . O A. $20,566 O B. $19,040 O C. $19,768 O D. $17,640When investing $10,000 today, to determine how much you will have in four years at an interest rate of 8%, you use the table. O A. present value of $1 0 B. future value of ordinary annuity of $1 0 c. future value of $1 0 D. present value of ordinary annuity of $1 Assume you invest $9,200 per year at the end of each year at 10%. How much will you have at the end of 4 years? Future Value of Ordinary Annuity of $1: 8% 9% 10% 1.000 1.000 1.000 2.080 2.090 2.100 3.246 3.278 3.310 4.506 4.573 4.641 5.867 5.985 6.105 7.336 7.523 7.716 GUI-AWNl O A. $42,072 0 B. $41,455 0 C. $30,452 0 D. $42,697 Luong Machines Company is evaluating an investment of $1,300,000 which will yield net cash inows of $217,719 per year for 8 years with no residual value. What is the internal rate of return? Present value of ordinary annuity of $1: 5% 6% 7% 8% 1 0.952 0.943 0.935 0.926 2 1.859 1 .833 1 .808 1 .733 3 2.723 2.673 2.624 2.577 4 3.546 3,465 3,337 3.312 5 4.329 4.212 4.100 3.993 6 5.076 4.917 4.767 4.623 7 5.786 5.582 5.389 5.206 8 6.463 6.21 5.971 5.747 9 7.108 6.802 6.515 6.247 10 7.722 7.36 7.024 6.71 o A. 6% o a. 3% o c. 7% OD. 9%