You decide that you need $47,000 in 3 years to make a down payment on a house. You plan to make annual fixed deposits to achieve your goal. If the interest rate is 2.5%, how much should be deposited each time? Hint use the Financial Function “PMT” to solve for the payment, and PV will be zero.You owe $25,000 to your parents. You promise to make 10 annual payments of $3,000 to settle your debt. What interest rate are your parents charging (estimated up to 2 decimal places), if you make the 10 annual payments beginning one year from now? Hint use the Financial Function “RATE”. Note if you need help use the “Help on this function” feature. This help will include an example for you to follow.You are offered an investment that will pay $14,000 per year for 17 years, beginning one year from now. If you feel that the appropriate discount rate is 3.4%, what is the investment worth to you today?Your grandparents offered you some money via the following options. Assuming an annual interest rate of 8%, which option should you choose? Show your work. a. a. Receive $12,000 immediately b. Receive $1,000 at the end of each six months for six years. This results in payments totaling $8,000. You will receive the first check in six months. c. Receive $800 at the end of each year for three years, and then $8,000 at the end of the fourth year. This results in payments totaling $10,400.

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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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You decide that you need $47,000 in 3 years to make a down payment on a house. You plan to make annual fixed deposits to achieve your goal. If the interest rate is 2.5%, how much should be deposited each time? Hint use the Financial Function “PMT” to solve for the payment, and PV will be zero.
You owe $25,000 to your parents. You promise to make 10 annual payments of $3,000 to settle your debt. What interest rate are your parents charging (estimated up to 2 decimal places), if you make the 10 annual payments beginning one year from now? Hint use the Financial Function “RATE”. Note if you need help use the “Help on this function” feature. This help will include an example for you to follow.
You are offered an investment that will pay $14,000 per year for 17 years, beginning one year from now. If you feel that the appropriate discount rate is 3.4%, what is the investment worth to you today?
Your grandparents offered you some money via the following options. Assuming an annual interest rate of 8%, which option should you choose? Show your work. a. a. Receive $12,000 immediately b. Receive $1,000 at the end of each six months for six years. This results in payments totaling $8,000. You will receive the first check in six months. c. Receive $800 at the end of each year for three years, and then $8,000 at the end of the fourth year. This results in payments totaling $10,400.

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