Exam 24: Time Value of Money Module

Sol's Laundry began depositing $1, 000 equal annual deposits in a fund beginning on January 2, 2010.The fund earns 10% compounded annually, and the last deposit is made on January 2, 2014.How much will be in the fund on January 2, 2015, one year after the final deposit?

Balance sheet values are calculated using compound interest (present value)calculations for all of the following except

Kevin Nathan will deposit $1, 000 into a special account each year beginning December 31, 2010, with the last deposit being made on December 31, 2014.Kevin wants to know how much will be in his account on December 31, 2014, immediately after the final deposit, if the account earns 12% compounded annually.To solve the problem, Kevin must find the

At the beginning of 2010, Lucy Co.issued bonds with a face value of $500, 000 due on December 31, 2016.The company desires to accumulate a fund to retire these bonds at maturity by making equal annual deposits beginning on December 31, 2010. Required: Compute the amount that the company must deposit at the end of each year, assuming that the fund will earn 10% interest a year compounded annually and seven deposits are made.

The present value of $75, 000 received at the end of eight years discounted at 12% is

The formula for the present value of a single sum at compound interest is

Nancy's parents loaned her $80, 000 to fund her college education.Her parents are not charging interest.They desire to be paid in one lump sum of $80, 000 when Nancy can accumulate that amount.Nancy established a savings plan that earns 8% compounded annually.Her new job promises to pay an annual holiday bonus that will enable her to make equal annual, year-end deposits of $6, 400.Approximately how many years will it take Mary to accumulate the desired $80, 000?

Sally has $3, 000, 000 on deposit in a fund that earns 10% interest compounded annually.How much can Sally withdraw annually from the fund in ten equal annual withdrawals to completely deplete the fund after the tenth draw, assuming the first withdrawal occurs one year from today?

Interest compounded on a $10, 000 principal amount monthly at 18% for two years is

On May 1, 2010, Mosier Company acquired a new machine by agreeing to pay five equal annual payments of $20, 000, beginning on May 1, 2010.Assuming an interest rate of 14% compounded annually, Mosier should record the acquisition cost of the machine on May 1, 2010, at

Nola has $1, 000, 000 in her retirement account.She wants to make 20 equal withdrawals, beginning immediately.The investment plan earns 6%.How much should each withdrawal be?

When the present value of an annuity is calculated as of two or more periods before the payment of the first rent, the annuity is a(n)

Lori Miller deposits $2, 000 each year into a savings account beginning January 1, 2010.The last payment will be made on January 1, 2019, after which the total amount will be withdrawn to purchase a yacht.To find the amount available on January 1, 2014, after the last payment, Lori must determine

Compound interest factors are provided below: 35\%,n=10 5\%,n=20 10\%,n=10 10\%,n=20 Future value of a lump sum 1.629 2.653 2.594 6.728 Future value of an ordinary amuity 12.578 33.067 15.937 57.275 Present value of a lump sum .614 .377 .386 149 Present value of an ordinary amuity 7.722 12.462 6.145 8.514 Present value of an anmuity due 8.108 13.089 6.759 9.365 Required: Using the above factors, answer each of the following questions.

Joseph desires to purchase an annuity on January 1, 2010, that yields him five annual rents of $10, 000 each, with the first rent to be received on January 1, 2013.The interest rate is 10% compounded annually.The cost (present value)of the annuity on January 1, 2010, is

Grandpa Brown has agreed to deposit a lump sum into an account that pays 12% interest compounded annually in order to pay for his granddaughter's college education.The granddaughter estimated that she will need to withdraw $40, 000 at the beginning of each year for four years to pay for room, board, tuition, and books.Grandpa will deposit the lump sum on August 1, 2010, and the granddaughter will make the first withdrawal on September 1, 2016. Required: Determine the amount that Grandpa Brown must deposit.Clearly label all work.

All of the following are conditions for an annuity except

On January 1, 2010, Steelton Company completed arrangements to purchase a new piece of equipment.The agreement calls for equal annual payments on January 1 of each year for six years.The first payment of $7, 500 is to be made on January 1, 2010.The implied interest rate is 12%. Required: Calculate the cost of the equipment to Steelton Company.

Milton desires to have $6, 442 on deposit five years from today.If he has $4, 000 to deposit, what rate of interest, compounded annually, must be obtained to accumulate the desired $6, 442 in five years?

In the present value of an annuity table, the factors