Homework Help is Here – Start Your Trial Now!
Business
Accounting
2. You expect to deposit the following cash flows at the end of years 1 through 5, ($1,000; $4,000; $9,000; $5,000; and $2,000) respectively. Alternatively, you could deposit a single amount today at the beginning of year 1 (end of year 0). How large does the single deposit need to be today if you can earn 10% compounded annually? Hint: the present value today (t-0) is identical to the single cash flow amount. a) $15,633.62 b) $21,000.00 c) $25,178.10 d) $27,695.91

2. You expect to deposit the following cash flows at the end of years 1 through 5, ($1,000; $4,000; $9,000; $5,000; and $2,000) respectively. Alternatively, you could deposit a single amount today at the beginning of year 1 (end of year 0). How large does the single deposit need to be today if you can earn 10% compounded annually? Hint: the present value today (t-0) is identical to the single cash flow amount. a) $15,633.62 b) $21,000.00 c) $25,178.10 d) $27,695.91

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Q 2 please
Choose the correct answers for the following questions: 1. What is the annual equivalent interest rate of a cash flow of $500 received now, with a present worth of $386.47 at an interest rate of 10% per year? a) 5% b) 10% c) 7.6931% d) 15% 2. You expect to deposit the following cash flows at the end of years 1 through 5, ($1,000; $4,000; $9,000; $5,000; and $2,000) respectively. Alternatively, you could deposit a single amount today at the beginning of year 1 (end of year 0). How large does the single deposit need to be today if you can earn 10% compounded annually? Hint: the present value today (t-0) is identical to the single cash flow amount. a) $15,633.62 b) $21,000.00 c) $25,178.10 d) $27,695.91 3. What is the annual equivalent rate of an investment that pays 5% semi-annually? a) 5.25% b) 5.00% c) 4.75% d) 5.50% 4. What is the present worth of a project that has an initial investment of $50,000 and generates annual cash inflows of $10,000 for 10 years, with a discount rate of 8%? b) $46,881 a) $429,907 c) $55,398 d) $82,500 5. An engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. What does he have to pay at the end of the fifth year in order to pay off his loan? a) P 6,999.39 b) P 6,292.93 c) P 6,222.39 d) P 6,922.93
Transcribed Image Text:Choose the correct answers for the following questions: 1. What is the annual equivalent interest rate of a cash flow of $500 received now, with a present worth of $386.47 at an interest rate of 10% per year? a) 5% b) 10% c) 7.6931% d) 15% 2. You expect to deposit the following cash flows at the end of years 1 through 5, ($1,000; $4,000; $9,000; $5,000; and $2,000) respectively. Alternatively, you could deposit a single amount today at the beginning of year 1 (end of year 0). How large does the single deposit need to be today if you can earn 10% compounded annually? Hint: the present value today (t-0) is identical to the single cash flow amount. a) $15,633.62 b) $21,000.00 c) $25,178.10 d) $27,695.91 3. What is the annual equivalent rate of an investment that pays 5% semi-annually? a) 5.25% b) 5.00% c) 4.75% d) 5.50% 4. What is the present worth of a project that has an initial investment of $50,000 and generates annual cash inflows of $10,000 for 10 years, with a discount rate of 8%? b) $46,881 a) $429,907 c) $55,398 d) $82,500 5. An engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. What does he have to pay at the end of the fifth year in order to pay off his loan? a) P 6,999.39 b) P 6,292.93 c) P 6,222.39 d) P 6,922.93
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Present Value
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS