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1. The current value of a lottery ticket paying $4,000 per year for 10 years, with the first payment being currently due, and assuming a 5% annual interest rate. 2. The amount that a $2550 deposit into an investment account will grow to in 5 years, at 8% interest, compounded quarterly. 3. The current measurement of a $125,000 obligation that is due 3 years, assuming a 10% annual interest rate.

1. The current value of a lottery ticket paying $4,000 per year for 10 years, with the first payment being currently due, and assuming a 5% annual interest rate. 2. The amount that a $2550 deposit into an investment account will grow to in 5 years, at 8% interest, compounded quarterly. 3. The current measurement of a $125,000 obligation that is due 3 years, assuming a 10% annual interest rate.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. The current value of a lottery ticket paying $4,000 per year for 10 years, with the first payment being currently due, and assuming a 5% annual interest rate.


2. The amount that a $2550 deposit into an investment account will grow to in 5 years, at 8% interest, compounded quarterly.


3. The current measurement of a $125,000 obligation that is due 3 years, assuming a 10% annual interest rate.

Evaluate the six scenarios below and use the pick-list choices associated with the boxed areas to decide the "type," "factor," and "value" associated with each scenario. Correct choices will turn the boxed areas green. (Note PV means present value and FV means future value). SCENARIO The current value of a lottery ticket paying $3,000 per year for 10 years, with the first payment being currently due, and assuming a 5% annual interest rate. The amount that a $1,000 deposit into an investment account will grow to in 5 years, at 8% interest, compounded quarterly. The current measurement of a $100,000 obligation that is due 3 years, assuming a 10% annual interest rate. The amount that must be set aside today to enable annual payments of $50,000 each for 5 years, beginning at the end of the first year. The annual interest rate is 6%. The amount one would have in a retirement account if they deposit $5,000 per year beginning immediately, for a total of 30 years. The annual interest is 5%. The amount one would have in a retirement account if they deposit $5,000 per year beginning at the end of the first year, for a total of 30 years. The annual interest is 5%. TYPE PV of an annuity due FV of a lump sum PV of a lump sum PV of an ordinary annuity FV of annuity due FV of an ordinary annuity FACTOR 8.10782 1.48595 0.75131 4.21236 69.76079 66.43885 VALUE 24,323.46 1,485.95 75,131 210,618 348,803.95 332,194.25
Transcribed Image Text:Evaluate the six scenarios below and use the pick-list choices associated with the boxed areas to decide the "type," "factor," and "value" associated with each scenario. Correct choices will turn the boxed areas green. (Note PV means present value and FV means future value). SCENARIO The current value of a lottery ticket paying $3,000 per year for 10 years, with the first payment being currently due, and assuming a 5% annual interest rate. The amount that a $1,000 deposit into an investment account will grow to in 5 years, at 8% interest, compounded quarterly. The current measurement of a $100,000 obligation that is due 3 years, assuming a 10% annual interest rate. The amount that must be set aside today to enable annual payments of $50,000 each for 5 years, beginning at the end of the first year. The annual interest rate is 6%. The amount one would have in a retirement account if they deposit $5,000 per year beginning immediately, for a total of 30 years. The annual interest is 5%. The amount one would have in a retirement account if they deposit $5,000 per year beginning at the end of the first year, for a total of 30 years. The annual interest is 5%. TYPE PV of an annuity due FV of a lump sum PV of a lump sum PV of an ordinary annuity FV of annuity due FV of an ordinary annuity FACTOR 8.10782 1.48595 0.75131 4.21236 69.76079 66.43885 VALUE 24,323.46 1,485.95 75,131 210,618 348,803.95 332,194.25
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