You plan to retire in 10 years. Calculate the future value of the investment if you save $31,500 (Option 1) a year for the last five years before retirement or $20,400 (Option 2) for each of the 10 years. You are able to earn 10 percent interest on your investments. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Option 1-Future Value:

Option 2-Future Value:

which option would you choose?

You are a financial adviser working with a client who wants to retire in nine years. The client has a savings account with a local bank that pays 9 percent and she wants to deposit an amount that will provide her with $960,000 when she retires. Currently, she has $200,000 in the account. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

How much additional money should she deposit now to provide her with $960,000 when she retires? Additional deposit amount:

An investment will pay $14,000 at the end of the first year, $38,000 at the end of the second year, and $52,000 at the end of the third year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Determine the present value of this investment using a 7 percent interest rate. Present value of investment:

You want a retirement fund of $120,000 when you retire in six years. You are able to earn 7 percent on your investments. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

How much should you deposit each year to build the retirement fund that you want?

Amount to be deposited:

The Jenkins Corporation has purchased an executive jet. The company has agreed to pay $270,000 per year for the next 10 years and an additional $1,060,000 at the end of the 10th year. The seller of the jet is charging 6 percent interest. Determine the liability that would be recorded by Jenkins. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Present Value:

As a result of a slowdown in operations, Global Stores is offering employees who have been terminated a severance package of $118,000 cash, another $116,000 to be paid in one year, and an annuity of $24,000 to be paid each year for eight years beginning in one year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

What is the present value of the package, assuming an interest rate of 9 percent?

Present Value:

What is the present value of 8 equal payments of $16,000 with an interest rate of 13 percent? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Present Value:

What is the present value of $220,000 to be paid in 7 years with an interest rate of 13 percent? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Present Value:

You have just won the state lottery and have two choices for collecting your winnings. You can collect $68,000 (Option 1) today or receive $10,300 (Option 2) per year for the next six years. A financial analyst has told you that you can earn 8 percent on your investments. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Option 1-Present Value:

Option2- Present Value:

Kieso Company borrowed $700,000 on a 150-day note at 11 percent interest. The money was borrowed for 45 days in 2014 and 105 days in 2015; the note and interest were to be paid upon maturity in 2015. (Assume 360 days in a year.)

How much interest expense, if any, would be reported in 2014 and in 2015?

2014 Interest Expense:

2015 Interest Expense: