Part I: Discounting1.You want to set aside 5% of your income from your bi-weekly paycheck and watch it grow. If youwanted to know how much money that would be worth in 5 years, would you use present orfuture value?2. What is the present value of $792 four years from now using a 3% discount rate?3. What is the future value of $500 in 35 years if you receive an 8% rate of return?

Present Value is the value as of today of any future cash flows. Present Value = Future Value / (1 +…

Answered: 1. You want to set aside 5% of your…

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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Suppose you save $4,000 per year at the beginning of each year for 3 years and earn 5% interest per year. How much will you have at the end of 3 years? Suppose you save $4,000 per year at the beginning of each year for 10 years and earn 8.5% interest per year. How much will you have at the end of 10 years? NOTE:DONOT SOLOVE ON EXCEL
how much would $5,000 due in 10 years be worth today if the discount rate were 4.5? solve using financial calculator
You want to be able to withdraw $30,000 each year for 15 years. Your account earns 6% interest. How much do you need in your account at the beginning?
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.84% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.) $ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) $ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)
Suppose you plan to have $70,000 in 25 years from now and you can invest your savings at 6% compounded continuously. Assuming you can save the same amount of money each year, how much do you need to save on a yearly basis in order to achieve your goal? Hint: Treat your savings as an income stream. Yearly savings (exact value) =________ dol Yearly savings (rounded to the nearest cent) = _____dollars
Suppose you want to accumulate $20,000 for a down payment on a house in 5 years. How much must you deposit today into an account with an APR of 5% compounded monthly in order to have $20,000 in 5 years? PV = PMT= FV = APR = Periods = Compounding:
You have the option to receive $5,000 one year from now or $4,500 today. If the discount rate is 10%, which option should you choose to maximize your present value? Receive $5,000 one year from now Receive $4,500 today
Q1. You have been told that you need $x today in order to have $100,000 when you retire 20 years from now. The annual interest rate is 5% on average. Computex. Answer Q2. You plan to make a $40,000 contribution to your individual retirement account, at 3.5 percent per year on average. Compute how much it will be worth if you deposit it for 25 years. Answer Q3. Repeat Q1-Q2, when the interest rate is being componded every SIX MONTHS (or SEMIANNUALLY). Answer Q4. Erica is purchasing a financial instrument that will pay $5,000 a year for seven years, at the end of every year. How much should she pay for this investment today if she wishes to earn a 12 percent rate of return? Answer Q5. Repeat Q5, when you are committed to making contributions at the beginning of every year. Answer Q6. Solve for x: Jane recently purchased a new home with a mortgage of $x. She financed it at 6.6 percent interest with annual installments of $36,000 for thirty years. Answer Q7. Solve for x: Jane recently…
How much time will it take you to accumulate $625,000, assuming you invest $15,000 today and an additional $150 / month, and can earn a monthly return of 1%? Part II. How would your answer change if there was no upfront investment?
1. Calculate the present value of each cashflow using a discount rate of 7%. Which do you prefer most? Show and explain all supporting calculations. a. Cashflow A: receive Php60 today and then receive Php60 in four years. b. Cashflow B: receive Php12 every year, forever, starting today. Cashflow C: pay Php50 every year for five years, with the first payment being next year, and then subsequently receive Php30 every year for 20 years. d. Cashflow D: receive Php9 every other year, forever, with the first payment being next C. year.
You want to buy a $153,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan at 5.25% interest for the rest. a) How much is the loan amount going to be? $ b) What will your monthly payments be? $ c) How much total interest do you pay? $ d) Suppose you want to pay off the loan in 15 years rather than 30. What will your monthly payment be? $ e) How much money in interest will you save if you finance for 15 years instead of 30 years? $

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