P3-10

Please answer A, B, and C

P3-4 You have a trust fund that will pay you $1 million exactly ten years from today. You want cash now, so you are considering an opportunity to sell the right to the trust fund to an investor.

a. What is the least you will sell your claim for if you could earn the following rates of return on similar risk investments during the ten-year period?

1. 6%

2. 9%

3. 12$

b. Rework part (a) under the assumption that the $1 million payment will be received in 15 rather than 10 years.

c. Based on your findings in part (a) and (b), discuss the effect of both the size of the rate of return and the time until receipt of payment on the present value of a future sum.

Don Lieberman and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $52 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was $13,830. (a) Determine the cost of each job. (b) Indicate the balance of the Service Contracts in Process account at the end of November. (c) Calculate the ending balance of the Operating Overhead account for November. P3-4 You have a trust fund that will pay you $1 million exactly ten years from today. You want cash now, so you are considering an opportunity to sell the right to the trust fund to an investor. a. What is the least you will sell your claim for if you could earn the following rates of return on similar risk investments during the ten-year period? 1. 6% 2. 9% 3. 12$ b. Rework part (a) under the assumption that the $1 million payment will be received in 15 rather than 10 years. c. Based on your findings in part (a) and (b), discuss the effect of both the size of the rate of return and the time until receipt of payment on the present value of a future sum