For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would use. (PV of $1, FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to accumulate $10,600 for a trip you wish to take in four years. You are able to earn 8% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? 1. You want to retire after working 40 years with savings in excess of $1,120,000. You expect to save $4,480 a year for 40 years and earn an annual rate of interest of 8%. c-2. Will you be able to retire with more than $1,120,000 in 40 years? d-1. A sweepstakes agency names you a grand prize winner. You can take $252,000 immediately or elect to receive annual installments of $31,200 for 20 years. You can earn 12% annually on any investments you make. d-2. Which prize do you choose to receive?
For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would use. (PV of $1, FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to accumulate $10,600 for a trip you wish to take in four years. You are able to earn 8% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? 1. You want to retire after working 40 years with savings in excess of $1,120,000. You expect to save $4,480 a year for 40 years and earn an annual rate of interest of 8%. c-2. Will you be able to retire with more than $1,120,000 in 40 years? d-1. A sweepstakes agency names you a grand prize winner. You can take $252,000 immediately or elect to receive annual installments of $31,200 for 20 years. You can earn 12% annually on any investments you make. d-2. Which prize do you choose to receive?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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Transcribed Image Text:For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity,
(2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would
use. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places.
a. You need to accumulate $10,600 for a trip you wish to take in four years. You are able to earn 8% compounded semiannually on
your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount
of the one-time deposit?
b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required
amount of each semiannual deposit?
1. You want to retire after working 40 years with savings in excess of $1,120,000. You expect to save $4,480 a year for 40 years and
earn an annual rate of interest of 8%.
c-2. Will you be able to retire with more than $1,120,000 in 40 years?
d-1. A sweepstakes agency names you a grand prize winner. You can take $252,000 immediately or elect to receive annual
installments of $31,200 for 20 years. You can earn 12% annually on any investments you make.
d-2. Which prize do you choose to receive?
Complete this question by entering your answers in the tabs below.
Req A
Req B
Future Value
Req C1
10,600 X
Table Values are Based on:
Req C2
You need to accumulate $10,600 for a trip you wish to take in four years. You are able to earn 8% compounded semiannually
on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine
the amount of the one-time deposit?
Note: Round your answer to 2 decimal places.
Table Factor
0.7307
Reg D1
=
Present Value
7,745.42
Req D2
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