Exam 26: Present and Future Values in Accounting

A company borrows money from the bank by promising to make 6 annual year-end payments of $27,000 each. How much is the company able to borrow if the interest rate is 9%?

(Short Answer)

4.8/5

(34)

Question 21

Chris wants to accumulate $100,000 in 5 years. He plans on making equal semiannual deposits into an investment account that earns 12% semiannually in order to reach his goal. How much must Chris invest every six months? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

(Multiple Choice)

4.8/5

(37)

Question 22

The number of periods in a present value calculation may only be expressed in years.

(True/False)

4.9/5

(36)

Question 23

Jackson has a loan that requires a $17,000 lump sum payment at the end of four years. The interest rate on the loan is 5%, compounded annually. How much did Jackson borrow today? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

(Multiple Choice)

4.9/5

(40)

Question 24

An interest rate is also called a discount rate.

(True/False)

4.8/5

(36)

Question 25

Present and future value computations enable companies to measure or estimate the interest component of holding assets or liabilities over time.

(True/False)

4.8/5

(31)

Question 26

A company has $46,000 today to invest in a fund that will earn 4% compounded annually. How much will the fund contain at the end of 6 years?

(Short Answer)

4.9/5

(24)

Question 27

A company is considering an investment that will return $22,000 semiannually at the end of each semiannual period for 4 years. If the company requires an annual return of 10%, what is the maximum amount it is willing to pay for this investment? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

(Multiple Choice)

4.8/5

(33)

Question 28

Sandra has a savings account that has accumulated to $50,000. She started with $28,225, and earned interest at 10% compounded annually. It took her five years to accumulate the $50,000. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

(True/False)

4.8/5

(35)

Question 29

From the perspective of an account holder, a savings account is a liability with interest.

(True/False)

4.8/5

(35)

Question 30

A company needs to have $200,000 in 4 years, and will create a fund to insure that the $200,000 will be available. If it can earn a 7% return compounded annually, how much must the company invest in the fund today to equal the $200,000 at the end of 4 years?

(Short Answer)

4.7/5

(29)

Question 31

Explain the concept of the present value of an annuity.

(Essay)

4.8/5

(40)

Question 32

Explain the concept of the future value of a single amount.

(Essay)

4.8/5

(27)

Question 33

A company borrows money from the bank by promising to make 8 semiannual payments of $9,000 each. How much is the company able to borrow if the interest rate is 10% compounded semiannually?

(Short Answer)

4.7/5

(35)

Question 34

In a present value or future value table, the length of one time period may be interpreted as one year, one month, or any other length of time.

(True/False)

4.8/5

(25)

Question 35

Russell Company has acquired a building with a loan that requires payments of $20,000 every six months for 5 years. The annual interest rate on the loan is 12%. What is the present value of the building? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

(Multiple Choice)

4.9/5

(38)

Question 36

A company is beginning a savings plan to purchase a new building. It will be saving $43,000 per year for the next 10 years. How much will the company have accumulated after the tenth year-end deposit, assuming the fund earns 9% interest?

(Short Answer)

5.0/5

(36)

Question 37

A company has $50,000 today to invest in a fund that will earn 7%. How much will the fund contain at the end of 8 years?

(Short Answer)

4.8/5

(36)

Question 38

Protocol Company has acquired equipment from a dealer that requires equal payments of $12,000 at the end of each of the next five years. This transaction includes interest at 9%, compounded annually. What is the value of the machine today?

(Short Answer)

4.7/5

(32)

Question 39

The number of periods in a future value calculation may only be expressed in years.

(True/False)

4.8/5

(30)

Question 40

Showing 21 - 40 of 84

Exam 26: Present and Future Values in Accounting

A company borrows money from the bank by promising to make 6 annual year-end payments of $27,000 each. How much is the company able to borrow if the interest rate is 9%?

The number of periods in a present value calculation may only be expressed in years.

Jackson has a loan that requires a $17,000 lump sum payment at the end of four years. The interest rate on the loan is 5%, compounded annually. How much did Jackson borrow today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

An interest rate is also called a discount rate.

Present and future value computations enable companies to measure or estimate the interest component of holding assets or liabilities over time.

A company has $46,000 today to invest in a fund that will earn 4% compounded annually. How much will the fund contain at the end of 6 years?

Sandra has a savings account that has accumulated to $50,000. She started with $28,225, and earned interest at 10% compounded annually. It took her five years to accumulate the $50,000. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

From the perspective of an account holder, a savings account is a liability with interest.

A company needs to have $200,000 in 4 years, and will create a fund to insure that the $200,000 will be available. If it can earn a 7% return compounded annually, how much must the company invest in the fund today to equal the $200,000 at the end of 4 years?

Explain the concept of the present value of an annuity.

Explain the concept of the future value of a single amount.

A company borrows money from the bank by promising to make 8 semiannual payments of $9,000 each. How much is the company able to borrow if the interest rate is 10% compounded semiannually?

In a present value or future value table, the length of one time period may be interpreted as one year, one month, or any other length of time.

A company is beginning a savings plan to purchase a new building. It will be saving $43,000 per year for the next 10 years. How much will the company have accumulated after the tenth year-end deposit, assuming the fund earns 9% interest?

A company has $50,000 today to invest in a fund that will earn 7%. How much will the fund contain at the end of 8 years?

Protocol Company has acquired equipment from a dealer that requires equal payments of $12,000 at the end of each of the next five years. This transaction includes interest at 9%, compounded annually. What is the value of the machine today?

The number of periods in a future value calculation may only be expressed in years.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Activity-Based Costing

Filters

Jackson has a loan that requires a $17,000 lump sum payment at the end of four years. The interest rate on the loan is 5%, compounded annually. How much did Jackson borrow today? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Sandra has a savings account that has accumulated to $50,000. She started with $28,225, and earned interest at 10% compounded annually. It took her five years to accumulate the $50,000. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)