26. $ provide you with $30,000 for a down payment for your first home. You mentioned to her you plan to buy a home in 6 years. She agrees to set aside money for you today so she will have money to give you when you purchase your first home. The market rate she can earn over the investment period is 6% and it will compound quarterly, what amount will she set aside today? (Round to nearest dollar) Your favorite aunt has committed to

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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Question 26
TIME VALUE OF MONEY (use BAII Plus Financial
Calculator to answer questions 25 – 30). If you do not
have a financial calculator use the Preferred Short Cut
Factor Tables spreadsheet found in Canvas Modules.
25. $
You plan to start your own business in
5 years once you graduate from college and get situated.
You plan save $250 every month for the next 5 years.
The market rate you can earn is 9%; how much will your
investment accumulate to when you are ready to start
your business? (Round to nearest dollar)
26. $
Your favorite aunt has committed to
provide you with $30,000 for a down payment for your
first home. You mentioned to her you plan to buy a home
in 6 years. She agrees to set aside money for you today
so she will have money to give you when you purchase
your first home. The market rate she can earn over the
investment period is 6% and it will compound quarterly,
what amount will she set aside today? (Round to nearest
dollar)
27. $
You won the lottery when the jackpot
was advertised at $3,000,000 (based on annual
payments of $100,000 for 30 years). Your choice is to
take the annual payments for 30 years or take the lump
sum payout today which is the present value of the
advertised jackpot. The lottery administration uses a
3.5% interest rate. What is the value of the lump sum
payout? (Round to nearest dollar)
Transcribed Image Text:TIME VALUE OF MONEY (use BAII Plus Financial Calculator to answer questions 25 – 30). If you do not have a financial calculator use the Preferred Short Cut Factor Tables spreadsheet found in Canvas Modules. 25. $ You plan to start your own business in 5 years once you graduate from college and get situated. You plan save $250 every month for the next 5 years. The market rate you can earn is 9%; how much will your investment accumulate to when you are ready to start your business? (Round to nearest dollar) 26. $ Your favorite aunt has committed to provide you with $30,000 for a down payment for your first home. You mentioned to her you plan to buy a home in 6 years. She agrees to set aside money for you today so she will have money to give you when you purchase your first home. The market rate she can earn over the investment period is 6% and it will compound quarterly, what amount will she set aside today? (Round to nearest dollar) 27. $ You won the lottery when the jackpot was advertised at $3,000,000 (based on annual payments of $100,000 for 30 years). Your choice is to take the annual payments for 30 years or take the lump sum payout today which is the present value of the advertised jackpot. The lottery administration uses a 3.5% interest rate. What is the value of the lump sum payout? (Round to nearest dollar)
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