The State of Texas has a pension fund liability of $25 million, due in 10 years. Eachyear the legislature is supposed to set aside an annuity to arrive at this future value.This annuity is based on what the legislature believes it can earn on this money.Estimate the annuity needed each year for the next 10 years, assuming that theinterest rate that can be earned on the money is 6%.$1,896,699$3,657,129$6,687,085$4,675,987

Future Value of liability (FV) = $25 million or $25,000,000Annual Payment (P), we need to…

Answered: The State of Texas has a pension fund…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 9RE

See similar textbooks

Similar questions

blem #1: $10,000 is used to purchase an appropriate size annuity that has level annual payments for 18 years. The price of the annuity is based on an effective annual rate of 11.2%. As each payment is received, it is put into a fund that earns an effective annual rate of 7%. (a) Determine the accumulated value of the investment at the end of 18 years. (b) If the $10,000 were put into a fund that was to produce the same final value after 18 years, what annual effective rate would that fund have to offer?
Recent sales of some real estate and record profits make it possible for a manufacturer to set aside $900,000 in a fund to be used for modernization and remodeling. How much can be withdrawn from this fund at the beginning of each half-year for the next 6 years if the fund earns 7.1%, compounded semiannually? (a) Decide whether the problem relates to an ordinary annuity or an annuity due. ordinary annuity O annuity due (b) Solve the problem. (Round your answer to the nearest cent.) $
After the last financial crisis, a company is obligated to make additional quarterly payments to an unfunded pension fund during the next 3 years. The future value of those payments is to be $902,000. Actuarial estimations project the fund to earn interest at the rate of 8 percent per year. Payments are made at the end of each quarter. (Use factor table in Appendix B for calculation) Required 1: What is the present value of the additional payments to be made to the pension fund? $ Required 2: What is the amount of interest earned in the fourth period? $ Required 3: What is the total amount of contributed towards the pension fund at the beginning of period 8? $ Required 4: What is the total amount contributed towards the pension fund at the end of period 8 inmediately after the 8th payment was made? $ Required 5: Assume the company had a very profitable year and at the moment of making the 10th payment they decided to advance the remaining funds to achieve the total future value…
On January 1, 2021, you deposited $5,500 in a savings account. The account will earn 10 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: 1. What will be the balance in the savings account at the end of 9 years? (Future Value of $1.Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided.
Recent sales of some real estate and record profits make it possible for a manufacturer to set aside $1,200,000 in a fund to be used for modernization and remodeling. How much can be withdrawn from this fund at the beginning of each half-year for the next 6 years if the fund earns 7.5%, compounded semiannually? (a) Decide whether the problem relates to an ordinary annuity or an annuity due. (b) Solve the problem. (Round your answer to the nearest cent.)
Recent sales of some real estate and record profits make it possible for a manufacturer to set aside $1,000,000 in a fund to be used for modernization and remodeling. How much can be withdrawn from this fund at the beginning of each half-year for the next 5 years if the fund earns 6.7%, compounded semiannually? (a) Decide whether the problem relates to an ordinary annuity or an annuity due.
Jami Minard wants to receive an annuity of $5,000 at the beginning of each year for the next 10 years. How much (in $) should be deposited now at 7% compounded annually to accomplish this goal? (Round your answer to the nearest cent.)
Urgently need. An engineer wishes to set up a special fund by making uniform semiannual start-of-period (period 0) deposits for 10 years. The fund is to provide P100,000 at the end of each year of the last five years of the 10-year period. If interest is 10% compounded yearly, what is the required semiannual deposit to be made?
On January 1, 2021, you deposited $6,100 in a savings account. The account will earn 10 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: 1. What will be the balance in the savings account at the end of 4 years? (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 2. What is the total interest for the 4 years? (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 3. How much interest revenue did the fund earn in 2021 and in 2022?
A student will receive a $25,000 grant at the beginning of every year for the next five years. Assuming an annual interest rate of 4% is appropriate, the present value of an ordinary annuity is 4.4518 x $25,000 = $111,295, and the present value of an annuity due is 4.6299 x $25,000 = $115,748. What is the fair value of the grant payments according to the Financial Accounting Standards Board (FASB)? $130,000 $115,748 $125,000 $111,295
you want to establish an annuity that will pay $7,500 for the next twenty years (end year) your financial institution will establish such an annuity if you deposit $104,000 today. what is the implied rate that the institution is paying on this annuity?
Say that you want to establish a scholarship fund that will make fixed payments forever. To fund the scholarship, you plan to make 12 annual contributions of $9.9k to an investment account with an expected return of 6.0% interest annually. Your first contribution occurs today. If the scholarship fund makes its first payment two years following the last contribution, then what is the fixed annual payment that the scholarship fund will award? (Round to the nearest dollar)

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Principles of Accounting Volume 1

Accounting

ISBN:

9781947172685

Author:

OpenStax

Publisher:

OpenStax College

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

Principles of Accounting Volume 1

Accounting

ISBN:

9781947172685

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS