4. The amount that must be set aside today to enable annual payments of $40,000 each for 5 years, beginning at the end of the first year. The annual interest rate is 6%.5. The amount one would have in a retirement account if they deposit $3,500 per year beginning immediately, for a total of 30 years. The annual interest is 5%.6. The amount one would have in a retirement account if they deposit $2,300 per year beginning at the end of the first year, for a total of 30 years. The annual interest is 5%. Evaluate the six scenarios below and use the pick-list choices associated with the boxedareas to decide the "type," "factor," and "value" associated with each scenario. Correctchoices will turn the boxed areas green.(Note PV means present value and FV means future value).SCENARIOThe current value of a lottery ticket paying$3,000 per year for 10 years, with the firstpayment being currently due, and assuminga 5% annual interest rate.The amount that a $1,000 deposit into aninvestment account will grow to in 5 years,at 8% interest, compounded quarterly.The current measurement of a $100,000obligation that is due 3 years, assuming a10% annual interest rate.The amount that must be set aside today toenable annual payments of $50,000 each for5 years, beginning at the end of the firstyear. The annual interest rate is 6%.The amount one would have in a retirementaccount if they deposit $5,000 per yearbeginning immediately, for a total of 30years. The annual interest is 5%.The amount one would have in a retirementaccount if they deposit $5,000 per yearbeginning at the end of the first year, for atotal of 30 years. The annual interest is 5%.TYPEPV of an annuity dueFV of a lump sumPV of a lump sumPV of an ordinaryannuityFV of annuity dueFV of an ordinaryannuityFACTOR8.107821.485950.751314.2123669.7607966.43885VALUE24,323.461,485.9575,131210,618348,803.95332,194.25

Annuity is the series of equal cash payments over the period.

4. The amount that must be set aside today to enable annual payments of $40,000 each for 5 years, beginning at the end of the first year. The annual interest rate is 6%. 5. The amount one would have in a retirement account if they deposit $3,500 per year beginning immediately, for a total of 30 years. The annual interest is 5%. 6. The amount one would have in a retirement account if they deposit $2,300 per year beginning at the end of the first year, for a total of 30 years. The annual interest is 5%.

4. The amount that must be set aside today to enable annual payments of $40,000 each for 5 years, beginning at the end of the first year. The annual interest rate is 6%. 5. The amount one would have in a retirement account if they deposit $3,500 per year beginning immediately, for a total of 30 years. The annual interest is 5%. 6. The amount one would have in a retirement account if they deposit $2,300 per year beginning at the end of the first year, for a total of 30 years. The annual interest is 5%.

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

100%

4. The amount that must be set aside today to enable annual payments of $40,000 each for 5 years, beginning at the end of the first year. The annual interest rate is 6%.

5. The amount one would have in a retirement account if they deposit $3,500 per year beginning immediately, for a total of 30 years. The annual interest is 5%.

6. The amount one would have in a retirement account if they deposit $2,300 per year beginning at the end of the first year, for a total of 30 years. The annual interest is 5%.

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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