problem p6-2

problem p6-4

A B D E F G H K Name: Date: Instructor: Course: Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse P6-2 (Various Time Value Situations) Using the appropriate interest table or Excel formula, provide the solution to each of the following four questions by computing the unknowns. (a) What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund of $90,000 by the end of the eighth year, if the fund earns 8% interest, compounded annually? Text Title Formula (b) Diane Ross has $20,000 to invest today at How many years will it take her to accumulate enough to liquidate the debt? 9% to pay a debt of $47347 Text Title Formula (c) Cindy Houston has a $27.600 debt that she wishes to repay in today, she has $19,553 that she intends to invest for the will she need to earn annually in order to accumulate enough to pay the debt? 4 years from years. What rate of interest Text Title Formula P64 (Evaluating Payment Alternatives) Howie Long has just learned he has won a $500,000 prize in the lottery. The lottery has given him two options for receiving payments: (1) If Howie takes all the money today, the state and the federal governments will deduct taxes at a rate of 46% immediately. (2) Alternatively, the lottery offers Howie a payout of 20 equal payments of $36,000 with the first payment occurring when Howie turns in the winning ticket. Howie will be taxed on each of these payments at a rate of 25% Instructions: Assuming Howie can earn an 8% rate of return (compounded annually) on any money during this period, which pay-out option should he choose? Step 1: Determine of single payment cash yield: Formula Step 2: Determine the present value of an annuity due Cash payment is Tax burden is Annual cash yield is Amount Percentage Formula Text Title Formula Enter text answer here Note: Due to significant digits of formulas, calculators and tables, minor value differences may occur