am. 11 If the Company is required to make equal monthly payments into a sinking fund that will be used to pay off the amount that will be due at maturity of their bond issue and they wish tto calculate what that payment will be they will be determiningSelect oneO An annuity dueThe future value of a lump sumO The present value of a lump sumO An ordinary annuityClear my choice

A sinking fund is a financial mechanism established by an organization or entity to set aside money…

If the Company is required to make equal monthly payments into a sinking fund that will be used to pay off the amount that will be due at maturity of their bond issue and they wish to calculate what that payment will be they will be determining Select one O An annuity due The future value of a lump sum O The present value of a lump sum O An ordinary annuity Clear my choice

If the Company is required to make equal monthly payments into a sinking fund that will be used to pay off the amount that will be due at maturity of their bond issue and they wish to calculate what that payment will be they will be determining Select one O An annuity due The future value of a lump sum O The present value of a lump sum O An ordinary annuity Clear my choice

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 12DQ

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Future Value of an Annuity Refer to each case in the table below to answer what is required in this problem. Required: Find the future value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity—ordinary or annuity due—is preferable? Explain why.
Computing Present Value of Annuity Payments Under Different Assumptions Compute the present value of the annuity stream for each of the four separate investment scenarios that follow. Round interest rate percentages to two decimal places in your calculations (for example, enter .0063 for .633333%). Round final answer to the nearest whole dollar. Do not use a negative sign with your answer. Investment 1 Investment 2 Investment 3 Investment 4 Annual interest rate 7% 6% 5% 8% Investment period in years 5 6 5 10 Compounding periods Quarterly Annually Semiannually Monthly Payment per compounding period $10,000 $36,000 $20,000 $2,000 First payment Beg. of period End of period End of period Beg. of period Present Value Answer Answer Answer Answer
annuity due The only kind of interest rate that can be used in the interest Choose a match formulas engineering economy Type of annuity where the series of payments continue indefinitely Choose a match geometric gradient Application of engineering or mathematical analysis and synthesis to economic decisions Choose a match interest A graphical representation of cashflows drawn on a time Choose a match principal scale perpetuity Amount of money paid for the use of borrowed capital Choose a match cash flow diagram Type of annuity where the payments are made at the end of each period beginning on the first period Choose a match break even chart A series of equal payments occurring at equal interval of time. Choose a match ordinary annuity a series of payments where annual payments increase or decrease over time, by a constant percentage Choose a match compound interest
Use the following 8% interest factors 7 periods 8 periods 9 periods Select one: Present Value of Ordinary Annuity. a. $319,099 b. $267,687 C. $226,800 d. $172,398 5.2064 5.7466 6.2469 What will be the balance on September 1, 2029 in a fund which is accumulated by making $30,000 annual deposits each September 1 beginning in 2022, with the last deposit being made on September 1, 2027? The fund pays interest at 8% compounded annually. Future Value of Ordinary Annuity. 8.92280 10.63663 12.48756
A lump sum amount of money that must be deposited now to provide a specified series of equal payments (annuity) in the future is known as the future value of an annuity. O True O False
Need ASAP! Determine A) How much is each quarterly sinking fund deposit? B) Calculate the net interest paid in the 6th payment. (Hint: Net interest = Total Payment at time t - Principal Paid at time t) C) Calculate the Sinking Fund Balance immediately after the 6th payment is made.
The interest of a compound interest investmeut or loan can be computed with the formula 1-A-P. The end amount of a compound interest investment or loan can be computed with the formula A- P(1. The total percentage rate oe total retum of a simple interest investment or loan can be computed with the fonmala Laterest 100 Principal Use these foemulas to evaluate the aonts indicated below Chloe investa 15, 000 at a compound iaterest ate of 8 compounded monthly for 5 yesrs Deteine the total amot she will receive fros her ivestment at e end of 5 years Chloe will eceive a total of S the enl of 5 years Pevin dllars Detarine the istanet she will reoeive fe le vestnt athe end of5 years Choe will receiveS at he ted of 5 y Pview dllan D l p ag e ba tla nle otahe ond of5 years Cloes eet wil o tal Satentltiveo be inal ame the cnd of S your
Present value of an annuity Consider the following case. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Amount of annuity Interest rate Period (years) $26,000 9% 4 a. Calculate the present value of the annuity assuming that it is (1) An ordinary annuity. (2) An annuity due. b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity—ordinary or annuity due—is preferable? Explain why.
Future value of an annuity Using the values below, answer the questions that follow. (Click on the icon here 9 in order to copy the contents of the data table below into a spreadsheet.) Amount of annuity Interest rate Deposit period (years) $6,000 8% 10 a. Calculate the future value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due. b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity-ordinary or annuity due-is preferable as an investment? Explain why. ..... a. (1) The future value of the ordinary annuity is $ (Round to the nearest cent.) (2) The future value of the annuity due is $ (Round to the nearest cent.) b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity is preferable as an investment? (Select the best answer below.) Ordinary annuity, because it yields a greater future value. Annuity due, because it yields a greater future value.
Select all the statements on perpetuities that are correct. a. The present value of a perpetuity increases if the interest rate increases. b. If I multiply the present value of a perpetuity with the interest rate then I get the value of a single payment of the cashflow stream. c. The present value value of a perpetuity is independent of the interest rate. d. The present value of a perpetuity is infinite as all the payments add up to infinity. e. A perpetuity describes a constant cashflow at the end of each year that continues infinitely long.
Leaf Products may issue a 10-year maturity fixed-income security, which might include a sinking fund provision and either refunding or call protection.a. Describe a sinking fund provision.b. Explain the impact of a sinking fund provision on:i. The expected average life of the proposed security.ii. Total principal and interest payments over the life of the proposed security.c. From the investor’s point of view, explain the rationale for demanding a sinking fund provision.
Increasing the number of periods will increase all of the following except: Select one: A. The present value of an annuity B. The present value of $1 C. The future value of $1 D. The future value of an annuity