Exam 14: Specimen Financial Statements: Apple Inc

Luis Rodriguez wants to buy a car in 3 years. He will need $3,000 for a down payment. The annual interest rate is 9%. How much money must Luis invest today for the purchase?

Kim Black plans to buy a truck for $24,000 after 3 years. If the interest rate is 6%, how much money should Kim set aside today for the purchase?

Pleasant Company has decided to begin accumulating a fund for plant expansion. The company deposited $80,000 in a fund on January 2, 2013. Pleasant will also deposit $40,000 annually at the end of each year, starting in 2013. The fund pays interest at 4% compounded annually. What is the balance of the fund at the end of 2017 (after the 2017 deposit)?

When the periodic payments are not equal in each period, the future value can be computed by using a future value of an annuity table.

Compound interest is the return on principal

The process of determining the present value is referred to as discounting the future amount.

The present value of $10,000 to be received in 5 years will be smaller if the discount rate is

Frostmore Company is considering investing in an annuity contract that will return $50,000 annually at the end of each year for 20 years. What amount should Frostmore pay for this investment if it earns an 8% return?

CVS leases a building for 20 years. The lease requires 20 annual payments of $10,000 each, with the first payment due immediately. The interest rate in the lease is 10%. What is the present value of the cost of leasing the building?

Which of the following is not necessary to know in computing the future value of an annuity?

Which of the following accounting problems does not involve a present value calculation?

The present value of a long-term note or bond is a function of two variables.

You are purchasing a car for $25,000, and you obtain financing as follows: $2,500 down payment, 12% interest, semiannual payments over 5 years. Instructions Compute the payment you will make every 6 months.

If you are able to earn an 8% rate of return, what amount would you need to invest to have $30,000 one year from now?

Chang Company earns 12% on an investment that will return $400,000 eleven years from now. What is the amount Chang Company should invest now to earn this rate of return?

McGoff Company deposits $20,000 in a fund at the end of each year for 5 years. The fund pays interest of 4% compounded annually. The balance in the fund at the end of 5 years is computed by multiplying

The future value of 1 factor will always be

If the single amount of $3,000 is to be received in 3 years and discounted at 6%, its present value is

Interest is the difference between the amount borrowed and the principal.

All of the following are necessary to compute the future value of a single amount except the