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Present and future Value Computations a. Required: 1. Compute the present value for each of the following situations, assuming an interest rate of 10% compounded
Present and future Value Computations a. Required: 1. Compute the present value for each of the following situations, assuming an interest rate of 10% compounded annually. (Round amounts to the nearest dollar.) A single payment of $30,000 due on a mortgage five years from now. b. A series of payments of $6,000 each, due at the end of each year for five years. A five-year, 10% loan of $25,000, with interest payable annually, and the principal due in five years. 2. Compute the future value amounts (rounded to the nearest dollar) in each of the following situations: C. A $20,000 lump-sum investment today that will earn interest at 10% compounded annually over five years. Financing: Long-Term Liabilities Chapter 11 b. A $8,000 lump-sum investment today that will earn interest at 8%, compounded quarterly to provide money for a child's college education 15 years from now. Computing the Amount of Periodic Payments Computing the Amount of Periodic Payments Nathan Smith has just purchased a new car for $28,000. He paid $8,000 down and signed a note for the remaining $20,000. The interest rate on the note is 12% compounded monthly, or 1% per month Required: 1. Compute the amount of Mr. Smith's monthly payment if he plans to pay off the $20,000 note in 1530 monthly payments. Remember: The interest rate is 1% per 2. Repeat part (1) assuming that Mr. Smith wishes to repay the note in 60 monthly payments. 3. Assume that Mr. Smith decides to repay the note in 60 monthly payments. What is the balance remaining on the note immediately after he makes the 30th payment? Hint: Compute the present value of the remaining 30 payments. month
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