Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
1st Edition
ISBN: 9780134047430
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7, Problem 7.10E
Ordinary Annuity, Solve for Interest Rate, Financial Calculator. Two independent situations follow. Interest is compounded annually. Solve for the appropriate interest rate using a financial calculator or a spreadsheet.
- a. A college student wishes to purchase a new car. In order to pay for the vehicle, he borrows $15,000 from his parents today (beginning of the current year). Starting at the end of the current year, he must make 15 equal annual payments of $1,200 each. What interest rate is the student paying his parents?
- b. A finance professor wishes to invest $50,000 at the end of this year. He wants his investment to grow to $200,000 in 20 years. At what interest rate must the professor invest to reach his goal?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Can you please explain me how to solve this in excel
Directions: Determine whether each of the following situation is Simply Annuity or General Annuity. Write
your answers on the space provided.
1. A life insurance contribution paid monthly while the interest is compounded quarterly.
2. Your mom decided to join their office cooperative and agreed to contribute P1000 per
month beginning in January 2020 which will earn 3% compounded monthly.
3. Your parents are planning to save for their retirement. To do this, they want to set aside a
portion of their salaries and contribute monthly for their retirement funds which will earn
5% compounded quarterly.
4. Your eldest brother applied for a term life insurance. His contribution per year is P40 000
that earns 12% compounded monthly for 20 years.
5. A college educational plan earns 4% compounded quarterly and payments are made
quarterly.
6. Your eldest brother applied for a term life insurance. His contribution per year is P40 000
that earns 12% compounded monthly for 20 years.
7. A college…
Solve for the deffered annuity
Chapter 7 Solutions
Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - If interest is compounded more than once a year,...Ch. 7 - Prob. 7.4QCh. 7 - Can an ordinary annuity table be used to determine...Ch. 7 - Prob. 7.6QCh. 7 - Is the present value of an ordinary annuity more...Ch. 7 - Prob. 7.8QCh. 7 - Simple Interest. Assume Shafer Corporation...Ch. 7 - Compound Interest. Assume Shafer Corporation...
Ch. 7 - Prob. 7.3BECh. 7 - Prob. 7.4BECh. 7 - Prob. 7.5BECh. 7 - Present Value of a Single Sum, Compound Interest....Ch. 7 - Future Value of a Single Sum, Compound Interest....Ch. 7 - Prob. 7.8BECh. 7 - Present Value of a Single Sum, Compounded Interest...Ch. 7 - Prob. 7.10BECh. 7 - Present Value of a Single Sum, Calculating Time...Ch. 7 - Future Value of an Ordinary Annuity. An...Ch. 7 - Future Value of an Annuity Due. Mariah Carey...Ch. 7 - Future Value of an Ordinary Annuity: Calculating...Ch. 7 - Present Value of an Ordinary Annuity. CB...Ch. 7 - Present Value of an Annuity Due, Semiannual...Ch. 7 - Prob. 7.17BECh. 7 - Ordinary Annuity, Annuity Due, Using Interest...Ch. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Future Value of an Ordinary Annuity, Future Value...Ch. 7 - Single Sum, Solving for Other Variables. Two...Ch. 7 - Ordinary Annuity, Solve for Interest Rate,...Ch. 7 - Present Value, Note Payable Prices. Wiz Khalifa...Ch. 7 - Future Value of a Deterred Annuity. Lenny Shafer...Ch. 7 - Prob. 7.13ECh. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Future Value of an Annuity Due, Decision Making....Ch. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.1PCh. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Present Value, Present Value of an Annuity Due,...Ch. 7 - Prob. 7.4PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.6PCh. 7 - Prob. 7.7PCh. 7 - Present Value of an Annuity Due, Deferred...Ch. 7 - Present Value of an Ordinary Annuity, Present...Ch. 7 - Future Value of an Ordinary Annuity, Deferred...Ch. 7 - Present Value, Present Value of an Ordinary...Ch. 7 - Prob. 7.12PCh. 7 - Prob. 7.13PCh. 7 - Expected Cash Flows. Hiteck Electronics sells a...Ch. 7 - Prob. 7.15P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A student needs $6000 every six months to pay living expenses while at college. It will take him 8 years to complete his degree. Find the (a) lump sum that must be deposited to meet this need and (b) the interest earned assuming 5% per year, compounded semiannually. Click here to view Rage 1.of the present value of an annuity table. Click here to view Rage 2 of the present value of an annuity.table. (a) The lump sum is approximately $. (Round to the nearest cent as needed.)arrow_forwardAn investor wants to save money to purchase real estate. He deposits $550 at the end of each year in an ordinary annuity that pays 4% interest, compounded annually. Answer each part. Do not round any intermediate computations nor answers. If necessary, refer to the list of financial formulas. (a) Find the total value of the annuity at the end of the 1 year. st 24 (b) Find the total value of the annuity at the end of the 2 nd year. (c) Find the total value of the annuity at the end of the 3 rd year.arrow_forwardDetermine the kind of annuity used in the following situations. Then, solve the problem. Show your neat and complete solution. 1. Your dad deposits P 10,000 every 3 months for 7 years in an account paying 4% compounded quarterly.How much will she have in his account at the end of 7 years assuming no withdrawals were made?arrow_forward
- 1. Exercise One: Jessica decides to take a $25,000 to help her cover her tuition expenses. The tenor of the loan is 10 years, and the interest rate is 6.75%. Repayments will be made on a monthly frequency. Based on the aforementioned information, and the material covered in class, (a) use the PMT function in Excel to find the fixed total payment, (b) verify your answer from (a) by programming the present value annuity formula as shown in class, (c) create an amortization schedule for this loan, (d) create a bar chart showing the Fixed Total Payment, Interest Paid, and Principal Paid.arrow_forwardA computer chip designer purchased a car for $59,476.47, which includes sales tax and registration. The designer obtains a 5-year loan for the total amount at an annual interest rate of 6.3% compounded monthly. The designer will make monthly payments. The payments calculation for this type of loan uses the formula for the present value of which type of annuity? Given the formula for the payment amount of annuity where PMT is the payment amount in dollars, PV is the present value in dollars, n is the number of payments, and i is the interest rate per period. PMT= ? Determin the following values. PV= $ n= i= What is the designer’s monthly payment? (Round your answer to the nearest cent.)arrow_forwardMany persons prepare for retirement by making monthly contributions to a savings program. Suppose that $ 2,500 is set aside each year and invested in a savings account that pays 8% interest per year, compounded continuously. a. Determine the accumulated savings in this account at the end of 25 years. b. In Part (a), suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 25 The annuity will extend from the EOY 26 to the EOY 34 What is the value of this annuity if the interest rate and compounding frequency in Part (a) do not change? Click the icon to view the interest annuity table for continuous compounding when i=8% per yeararrow_forward
- Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that $2,500 is set aside each year and invested in a savings account that pays 8% interest per year, compounded continuously. a. Determine the accumulated savings in this account at the end of 29 years. b. In Part (a), suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 29. The annuity will extend from the EOY 30 to the EOY 36. What is the value of this annuity if the interest rate and compounding frequency in Part (a) do not change? Click the icon to view the interest and annuity table for continuous compounding when i=8% per year. a. The accumulated savings amount at the end of 29 years will be $275384. (Round to the nearest dollar.) b. The value of the annuity will be $41655. (Round to the nearest dollar.)arrow_forward(Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated $15,000 at the end of 7 years. To do this you plan on depositing an equal amount into the bank at the end of each year. If the bank is willing to pay 9 percent compounded annually, how much must you deposit each year to reach your goal? To reach your goal, your annual deposit must be $nothing. (Round to the nearest cent.)arrow_forwardSamuel wants to make regular annual payments of size P dollars into an annuity that pays interest of an annual rate of 0.25 or 25%. He wants to have 1.5 times the invested amount in the account after 5 years. A) Determine the size, P of the required annual payment. B) Create a table and do a step by step calculation to verify your answer in part Aarrow_forward
- Starting next year, you will need $5,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $5,000.) Your uncle deposits an amount today in a bank paying 7% annual interest, which will provide the needed $5,000 payments. How large must the deposit be? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. How much will be in the account immediately after you make the first withdrawal? Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forwardChoose the appropriate formula type for answering the following question: Suppose you want to have $410,500 for retirement in 15 years. Your account earns 6.5% interest. How much would you need to deposit in the account each month? Annuity Compound Interest Loan/Payout Annuityarrow_forwardDean Gooch is planning for his retirement, so he is setting up a payout annuity with his bank. He wishes to receive a payout of $1,500 per month for twenty-five years. (a) How much money must he deposit if his money earns 7.3% interest compounded monthly? (Round your answer to the nearest cent.) (b) Find the total amount that Dean will receive from his payout annuity.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
5 Steps to Setting Achievable Financial Goals | Brian Tracy; Author: Brian Tracy;https://www.youtube.com/watch?v=aXDuLxEJqBo;License: Standard Youtube License