Question

ACCT 200-TVM ASSIGNMENT # 2 Due in lab on November 7th & 8th 1. Fill in the missing amount in each independent colu mn: A, B, C (TVM of a Single Sum): A (Annual) (Annual) $25,000 (Annual) $60,000 Present Value Years Interest Rate Future Value 10 25 5 12% 10% 9% $25,000 ? Fill in the missing amounts in each independent colu mn : A, B, and C (TVM of an Annu ity): 2. A C (Annual) N/A (Annual) $18,000 N/A (Annual) Present Value Future Value Years N/A. ? 5 8% $9.000 15 11% ? 10 12% $1,000 Interest Rate Payment NING SUPPLEMEN The Uniity

Answer 1

A) Future value & $60,000 + (1 + 0.12) 25 - $60,000 x 17 = $1020,000 B) Future value = $25000 X (1+ 0.10) = $40263 c) Present value = $25000 (1+0:09)'° 25000 = $19,560 2.3674 A Future Value = $9000 X (1+ 0.08) - 1 0.08 = $52799 B) Periodic Dayment = $18000 (1- 1 15 1+ 0.11 0.11 = $2503 classmate PAGE I

c) Present value = $10vo (1 - 1 (1+0.13 0.12 =$5650 Q. 3 Joshua has two options to pay! option (i: pay $30,000 today Option (i): Cal" of Present value of annuity payments of 5000 Present value = $5000 (1 1 ) (1:06) 006 - $24586 ] Formulae Periodic Payment & ft- i= N= Interest rate No of years Conclusion: As option (ii) pay $5000 yearly. classmate Costs less, Joshwa should PAGE 146

DATE DATE DIDI $6000oo0 at the end of For Charlie to have 5 years He should invest an amount of: 6000 000 (1.075 6000 600) = 8915147 07130 6000000 = $ 4277710 1.4026 Should Invest $4,277,770 today. to earn $6 mn at the end Hence, @ 7% of 5 Charlie interest years. For Anna to return the money to Monica over 5 years at an Interest rate of 5% thon, the periodic payment would bei => $800d _ = $8000 = $1846 (1.0595 4.3295 0.05 Hence, Anna has to pay an amount of & 1848 to monica over 5 years to pay an amount equivalent to $8000 today.