Question

3:27 Il 21% TIME VALUE OF MONEY PROBLEMS 1. Fill in the missing amount in each independent column: A, B, C (TVM of a Single Sum): Present Value Years Interest Rate Future Value A (Annual) $15,000 6 4% ? B (Semi-Annual) $12,000 10 10% ? с (Annual) ? 15 8% $25.000 ACCT 200 FUNDAMENTALS OF FINANCIAL ACCOUNTING TVM ACTIVITY | PAGE 1 2. Fill in the missing amounts in each independent column: A, B, and C (TVM of an Annuity): Present Value Future Value Years Interest Rate Payment A (Annual) ? NA 10 8% $12,000 B (Annual) $150,000 ΝΙΑ 15 6% ? с (Annual) N/A ? 5 8% $3,500 3. Kim just got a job. She is so happy that she decided to reward herself by purchasing a rare 1980 blue YUGO. TA-R-US used cars has given her the option of paying $14,000 now or making 8 annual payments of $2,000 starting in exactly 1 year. The interest rate is 9%. Which plan should Kim choose? 4. Emma's goal in life is to own a ballet studio. Kenzie currently owns a studio, but she has plans to sell it. Emma agreed to pay Kenzie $3,000,000 5 years from today to acquire the studio. How much will Emma need to invest at 6% today to have enough money in 5 years 5. When Charlie was paying for his gas at the gas station, he saw the shiny Kansas Lottery tickets and decided to play. To his surprise, he won $10,000! If Charlie invests his winnings in an account that earns him 6% interest each year, how much money will he have in 20 years? ACCT 200 FUNDAMENTALS OF FINANCIAL ACCOUNTING TVM ACTIVITY | PAGE 2 6. Sam is planning a summer trip to Italy so he can study accounting where the world-famous accountant Luca Pacioli did. Unfortunately, Sam is short of $7,500 for the trip due to his recent injury. Luke has agreed to loan Sam the money because he believes that the homage to the double-entry birthplace is a must for all accountants. Luke expects to be paid back at 8% interest in annual payments over 6 years. What is the annual payment?

Answer 1

А B с D 13 1). A (Annual) 14 15 Present Value 16 Years 17 Interest Rate 18 Future Value $15,000.00 6 4% $18,979.79 B (Semi- C (Annual) Annual) $12,000.00 $7,881.04 10 15 10% 8% $31,839.57 $25,000.00 0

A B с D 13 1). A (Annual) B (Semi-Annual) C (Annual) 14 15 Present Value 16 Years 17 Interest Rate 18 Future Value 15000 12000 =PV(D17,D16,0,-D18) 6 10 15 0.04 0.1 0.08 =FV(B17,B16,0,-B15) =FV(C17/2,C16*2,0,-C15) 25000

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