Question

Graded Assignment Chapter 5 Saved Help 2 The following situations should be considered independently. (EV of $1, PVof 51. EVA of $1. PVA of$1. EVAD of $1 and PVAD of51) (Use appropriate factor(s) from the tables provided.) 1. John Jamison wants to accumulate $60,000 for a down payment on a small business. He will invest $30,000 today in a bank account paying 8 % interest compounded annually. Approximately how long will it take John to reach his goal? 2. The Jasmine Tea Company purchased merchandise from a supplier for $28,700. Payment was a noninterest-bearing note requiring Jasmine to make five annual payments of $7,000 beginning one year from the date of purchase. What is the interest rate implicit in this agreement? 3. Sam Robinson borrowed $10,000 from a friend and promised to pay the loan in 10 equal annual installments beginning one year from the date of the loan. Sam's friend would like to be reimbursed for the time value of money at a 9% annual rate. What is the annual payment Sam must make to pay back his friend? 40 points Skipped Print References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 John Jamison wants to accumulate $60,000 for a down payment on a small business. He will invest $30,000 today in a banko account paying 8% interest compounded annually. Approximately how long will it take John to reach his goal? (Do not round intermediate calculations. Round the value of "n" to the nearest whole number.) Present Value Future Value Req Required 2 > Graw <Prev 2 of 3 Next>

Answer 1

	Table or calculator function	Future value table
	Present Value	$30,000
	n=	9	Years
	i=	8%
	Future Value	$60,000
	FV =PV(1+i)^n	$60,000 = $30,000(1+0.08)^n
		$60,000 / $30,000 =(1+0.08)^n
		2.00 =(1+0.08)^n
		(1.08)^9 =1.99900 or 2
		So n=9 Years
	Table or calculator function	Annuity Table
	Present Value	$28,700
	n=	5
	i=	7%
	Annuity Payment	$7,000
	$28,700 =$7,000*PVAF(i,5)
	PVAF(i,6) =$28,700 / $7,000
	PVAF(i,5) =4.10
	I =7%
	It means that the annuity of $1 at 7% is equal to 4.41
	Table or calculator function	Annuity Table
	Present Value	$10,000
	n=	10
	i=	9%
	Annuity Installment	$1,558