Tyler Swift borrowed $1,100,000 to build a recording studio in his home. The total amount of the debt along with 6% annual interest must be repaid in 18 years. He decides to invest in a debt sinking fund that will be used to retire the debt. The fund earns 9% interest and requires him to pay an equal amount each year (end of each year) starting in Year 5 and lasting through maturity. Interest is compounded annually. (Click the icon to view the Future Value of $1 table.) (Click the icon to view the Present Value of $1 table.) (Click the icon to view the Future Value of an Ordinary Annuity table.) (Click the icon to view the Present Value of an Ordinary Annuity table.) (Click the icon to view the Present Value of an Annuity Due table.) (Click the icon to view the Future Value of an Annuity Due table.) Requirement What amount must Tyler Swift contribute each year in order to successfully retire the debt in 18 years? (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, XXXXXX Round intermediary currency computations and your final answer to the nearest cent, $XXX) Tyler Swift must contribute ( $194,846.43 each year in order to successfully retire the debt in 18 years
Tyler Swift borrowed $1,100,000 to build a recording studio in his home. The total amount of the debt along with 6% annual interest must be repaid in 18 years. He decides to invest in a debt sinking fund that will be used to retire the debt. The fund earns 9% interest and requires him to pay an equal amount each year (end of each year) starting in Year 5 and lasting through maturity. Interest is compounded annually. (Click the icon to view the Future Value of $1 table.) (Click the icon to view the Present Value of $1 table.) (Click the icon to view the Future Value of an Ordinary Annuity table.) (Click the icon to view the Present Value of an Ordinary Annuity table.) (Click the icon to view the Present Value of an Annuity Due table.) (Click the icon to view the Future Value of an Annuity Due table.) Requirement What amount must Tyler Swift contribute each year in order to successfully retire the debt in 18 years? (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, XXXXXX Round intermediary currency computations and your final answer to the nearest cent, $XXX) Tyler Swift must contribute ( $194,846.43 each year in order to successfully retire the debt in 18 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:K
Tyler Swift borrowed $1,100,000 to build a recording studio in his home. The total amount of the debt along with 6% annual interest must be repaid in 18 years.
He decides to invest in a debt sinking fund that will be used to retire the debt. The fund eams 9% interest and requires him to pay an equal amount each year
(end of each year) starting in Year 5 and lasting through maturity. Interest is compounded annually.
(Click the icon to view the Future Value of $1 table.)
(Click the icon to view the Present Value of $1 table.)
(Click the icon to view the Future Value of an Ordinary Annuity table.)
(Click the icon to view the Present Value of an Ordinary Annuity table.)
(Click the icon to view the Present Value of an Annuity Due table.)
(Click the icon to view the Future Value of an Annuity Due table.)
Requirement
What amount must Tylor Swift contribute each year in order to successfully retire the debt in 18 years? (Use the present value and future value tables, the
formula method, a financial calculator, or a spreadsheet for your calculations. If using present and future value tables or the formula method, use factor amounts
rounded to five decimal places, X.XXXXX Round intermediary currency computations and your final answer to the nearest cent, $X.XX.)
Tyler Swift must contribute
CLOS
$194,846.43 each year in order to successfully retire the debt in 18 years
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