Marshall has received an inheritance and wants to invest a sum
of money today that will yield $4,800 at the end of each of the
next 10 years. Assuming he can earn an interest rate of 5%
compounded annually, how much of his inheritance must he invest
today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided.)
a. 96,000.00
b. 37,064.16
c. 48,000.00
d. 45,600.00
e. 43,320.00
Portia Grant is an employee who is paid monthly. For the month
of January of the current year, she earned a total of 8,738. The
FICA tax for social security is 6.2% of the first $118,500 of
employee earnings each calendar year and the FICA tax rate for
Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and
the SUTA tax rate of 5.4% are applied to the first $7,000 of an
employee's pay. The amount of federal income tax withheld from her
earnings was $1,449.87. Her net pay for the month is:
(Round your intermediate calculations to two decimal
places.)
a. 6,566.00
b. 7,161.43
c. 5,116.13
d. 6,185.67
e. 6,619.67
On January 1, Parson Freight Company issues 7.5%, 10-year bonds
with a par value of $2,600,000. The bonds pay interest
semiannually. The market rate of interest is 8.5% and the bond
selling price was $2,423,327. The bond issuance should be recorded
as:
a. Debit Cash $2,600,000; credit Bonds Payable $2,600,000.
b. Debit Cash $2,423,327; credit Bonds Payable $2,423,327.
c. Debit Cash $2,423,327; debit Interest Expense $176,673; credit
Bonds Payable $2,600,000.
d. Debit Cash $2,423,327; debit Discount on Bonds Payable $176,673;
credit Bonds Payable $2,600,000.
e. Debit Cash $2,600,000; credit Bonds Payable $2,423,327; credit
Discount on Bonds Payable $176,673.
Which column (i) and row (n) would you use
from a present value or future value table for 10% interest
compounded quarterly for 6 years?
a. (i) = 2.50%, (n) = 24
b. (i) = 2.50%, (n) = 10
c. (i) = 5%, (n) = 12
d. (i) = 10%, (n) = 6
e. (i) = 5%, (n) = 24
1) | Marshall: | |||||
The amount to be deposited today is the PV of the annuity of $4800 | ||||||
= 4800*PVIFA(5,10) = 4800*7.7217 = | 37064.16 | |||||
Answer: Option [b] $37,064.16 | ||||||
2) | Portia Grant: | |||||
Gross earnings | 8738.00 | |||||
Deductions: | ||||||
FICA tax at 6.2% on 8738 | 541.76 | |||||
Medicare at 1.45% on 8738 | 126.70 | |||||
Income tax withheld | 1449.87 | 2118.33 | ||||
Net pay for the month | 6619.67 | |||||
Answer: Option [e] $6,619.67 | ||||||
FUTA and SUTA are payable by the employer. | ||||||
3) | Parson Freight company: | |||||
Answer: Option [d] Debit Cash $2,423,327; debit Discount on Bonds Payable $176,673; credit Bonds Payable $2,600,000. | ||||||
4) | Column to be used for PF or FV: a. (i) = 2.50%, (n) = 24 | |||||
i = 10/4 = 2.5% | ||||||
n = 6*4 =24 |
Marshall has received an inheritance and wants to invest a sum of money today that will...
Marshall has received an inheritance and wants to invest a sum of money today that will yield $5700 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (Use appropriate factor(s) from the tables provided.) A) $44,013.69 B) $114,000.00 C) $54,150.00 D) $57,000.00 E) $51,442.50
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Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
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