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Apply the concept from page 8-9 practice 6 of the VLN: On January 1st, BB Company acquired a truck that had a purchase price of $38.000. The seller agreed to allow BB to make monthly payments for the truck over a six- year period charging annual interest of 6%. What is the amount of the monthly payment? Round your answer to the nearest dollar._______

Apply the concept from page 8-9 practice 6 of the VLN: On January 1st, BB Company acquired a truck that had a purchase price of $38.000. The seller agreed to allow BB to make monthly payments for the truck over a six- year period charging annual interest of 6%. What is the amount of the monthly payment? Round your answer to the nearest dollar._______

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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Apply the concept from page 8-9 practice 6 of the VLN: On January 1st, BB Company acquired a truck that had a purchase price of $38.000. The seller agreed to allow BB to make monthly payments for the truck over a six- year period charging annual interest of 6%. What is the amount of the monthly payment? Round your answer to the nearest dollar._______
CASH FLOW| FACTOR ( %, n )| |Present Value| or Equation for the Factor Tables Cash flow x Factor = Value Cash flow x PV factor = Present value Cash flow x FV factor = Future Value For the Financial Calculator BAII PLUS * TEXAS INSTRUMENTS If the analysis is a single sum, then the PMT=0 If the analysis is an annuity, then either PV or FV will be = 0. If the Value is FV, PV = 0 If the Value is PV, FV =0 QuIT SET ENTER DEL CPT ONIOFF 2ND CF IRR AMORT CR TVH N PHT IV RAND + HYP SIN Cos TAN INV DATA STAT BOND 8 LN 7 9 ROUND DEPR BREEVH STO 4 6 DATE ICONV PROFIT + RCL CIR WORE 1 3 ANS CEC MEM FORMAT RESET +|- Calculate any Factor by typing in the number of compounding periods (n) and interest rate (%) FVA 4.18363 PV$1 PVA FV$1 4 3.00% 1.12551 0.88849 3.71710 1. Cash flow: single sum (PV or FV) or annuity (PMT); if PMT is involved, it will ALWAYS be the CASH FLOW! 2. Value: Present value or Future Value 3. I/Y (divide annual interest by compounding periods per year) 4. N: number of compounding periods over Chapter 8 the life afs'compounding periods per Page 8-1 year)
Transcribed Image Text:CASH FLOW| FACTOR ( %, n )| |Present Value| or Equation for the Factor Tables Cash flow x Factor = Value Cash flow x PV factor = Present value Cash flow x FV factor = Future Value For the Financial Calculator BAII PLUS * TEXAS INSTRUMENTS If the analysis is a single sum, then the PMT=0 If the analysis is an annuity, then either PV or FV will be = 0. If the Value is FV, PV = 0 If the Value is PV, FV =0 QuIT SET ENTER DEL CPT ONIOFF 2ND CF IRR AMORT CR TVH N PHT IV RAND + HYP SIN Cos TAN INV DATA STAT BOND 8 LN 7 9 ROUND DEPR BREEVH STO 4 6 DATE ICONV PROFIT + RCL CIR WORE 1 3 ANS CEC MEM FORMAT RESET +|- Calculate any Factor by typing in the number of compounding periods (n) and interest rate (%) FVA 4.18363 PV$1 PVA FV$1 4 3.00% 1.12551 0.88849 3.71710 1. Cash flow: single sum (PV or FV) or annuity (PMT); if PMT is involved, it will ALWAYS be the CASH FLOW! 2. Value: Present value or Future Value 3. I/Y (divide annual interest by compounding periods per year) 4. N: number of compounding periods over Chapter 8 the life afs'compounding periods per Page 8-1 year)
4. How much could you borrow today if you make semi-annual payments of $1,000 for 5 years at an 8% market interest rate? %24 4 7 10 %3D CASH FLOW X FACTOR ( %, n) or N IY PV PMT FV 5. How much would you pay for an investment that provides $100 semiannually for five years and at the end of five years it would also provide $5,000? At the time of your decision, the market rate of interest is 3.5%. $5000 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 1 4 5 6 7 9. 10 %3D CASH FLOW FACTOR ( %, n) CASH FLOW FACTOR ( %, n) or I/Y PV PMT FV Assets and Liabilities are recorded at PRESENT VALUE (cash equivalent) 6. On January 1st, BB Company acquired a truck that had a purchase price of $38,000. The seller agreed to allow BB to pay for the truck over a five-year period (12 payments per year, 60 payments in total) at 3% interest. Determine the amount of each payment: CASH FLOW FACTOR ( %, n) Present Value or 1/Y PV PMT FV Page 8-9 Chapter 8
Transcribed Image Text:4. How much could you borrow today if you make semi-annual payments of $1,000 for 5 years at an 8% market interest rate? %24 4 7 10 %3D CASH FLOW X FACTOR ( %, n) or N IY PV PMT FV 5. How much would you pay for an investment that provides $100 semiannually for five years and at the end of five years it would also provide $5,000? At the time of your decision, the market rate of interest is 3.5%. $5000 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 1 4 5 6 7 9. 10 %3D CASH FLOW FACTOR ( %, n) CASH FLOW FACTOR ( %, n) or I/Y PV PMT FV Assets and Liabilities are recorded at PRESENT VALUE (cash equivalent) 6. On January 1st, BB Company acquired a truck that had a purchase price of $38,000. The seller agreed to allow BB to pay for the truck over a five-year period (12 payments per year, 60 payments in total) at 3% interest. Determine the amount of each payment: CASH FLOW FACTOR ( %, n) Present Value or 1/Y PV PMT FV Page 8-9 Chapter 8
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