Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 7, Problem 7.5P
To determine
The retirement package that should be chosen by employees.
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A self-employed person deposits $2,000 annually in a retirement account (called a Keogh or H.R. 10 plan) that earns 9 percent. Use Appendix A and Appendix C to answer the questions. Round your answers to the nearest dollar.
How much will be in the account when the individual retires at the age of 65 if the savings program starts when the person is age 50?$
How much additional money will be in the account if the saver defers retirement until age 70 and continues the contributions?$
How much additional money will be in the account if the saver discontinues the contributions at age 65 but does not retire until age 70?$
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…
Provide final answer of this accounting question
Chapter 7 Solutions
Intermediate Accounting
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
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- You annually invest $1,000 in an individual retirement account (IRA) starting at the age of 30 and make the contributions for 10 years. Your twin sister does the same starting at age 45 and makes the contributions for 20 years. Both of you earn 6 percent annually on your investment. What amounts will you and your sister have at age 65? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar.Amount on your account: $ Amount on your sister's account: $ Who has the larger amount at age 65?-Select-You haveYour sister hasItem 3 the larger amount.arrow_forward.A self-employed person deposits $3,000 annually in a retirement account (called a Keogh or H.R. 10 plan) that earns 8 percent. How much additional money will be in the account if the saver defers retirement until age 70 and continues the contributions?arrow_forwardA person has an individual retirement account that they contribute | . $2,150 to annually at the end of each year. The person wants to retire after making 35 annual contributions to the account. Assuming that the account earns 12% interest annually, using the Future Value of an Annuity of 1 table, compute the value of the account on the date of the final contribution (35 years from the present).arrow_forward
- Provide manual solutions for below mentioned problems. A social worker deposits a uniform amount of P12,000 at the end of each year in order to get a lump sum of money by the time she will retire at the end of 20 years. If the compound amount factor for this annuity is equal to 36.78559. 1. Compute the nominal interest rate.2. Determine how much will she receive at the end of 20 years.3. Determine the worth of the sinking fund factor in this fund invested. Answer. 1. 6% 2. P441,427.08 3. 0.027184557arrow_forwardYour employer contributes $500 per month, at the beginning of each month, to a retirement fund on your behalf. The contributions earn interest at a rate of 6% per year, compounded monthly. At the end of twenty years, what will be the balance of the fund? Group of answer choices $69,790 $232,175 $70,139 $220,713 $231,020arrow_forwardA medical doctor, 48 years old, is enrolled in a pension fund that will pay he $6,000 monthly at retirement age 60. This fixed monthly pension payout will be for a period of 25 years. The doctor requires a 6%)annual return on her investments. The present value of this annuity today is closest to: A- $462798 B. $469.858 C- $945447arrow_forward
- Assume that a pension plan offers to pay $500,000 on a person's retirement (his/her sixty-fifth birthday) or a semi-annual annuity for the remainder of the person's life – i.e., starting 6 months from the date of retirement and including his/her date of death. Interest rates are 7 percent compounded annually, and a person's life expectancy has been determined statistically as being 78.5 years. Calculate the amounț of the annuity that would make a person indifferent between the options?l .Ysmarrow_forwardYou annually invest $1,500 in an individual retirement account (IRA) starting at the age of 25 and make the contributions for 15 years. Your twin sister does the same starting at age 40 and makes the contributions for 25 years. Both of you earn 6 percent annually on your investment. What amounts will you and your sister have at age 65? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar. Amount on your account: $ Amount on your sister's account: $ Who has the larger amount at age 65? Select the larger amount.arrow_forward(Pension Funding) You have been hired as a benefit consultant by Jean Honore, the owner of Attic Angels. She wants to establish a retirement plan for herself and her three employees. Jean has provided the following information. The retirement plan is to be based upon annual salary for the last year before retirement and is to provide 50% of Jean’s last-year annualsalary and 40% of the last-year annual salary for each employee. The plan will make annual payments at the beginning of each year for 20 years from the date of retirement. Jean wishes to fund the plan by making 15 annual deposits beginning January 1, 2017. Invested funds will earn 12% compounded annually. Information about plan participants as of January 1, 2017, is as follows. Jean Honore, owner: Current annual salary of $48,000; estimated retirement date January 1, 2042.Colin Davis, flower arranger: Current annual salary of $36,000; estimated retirement date January 1, 2047.Anita Baker, sales clerk: Current annual salary of…arrow_forward
- 5. A person 35 ages wishes to accumulate a fund for retirement by depositing an amount R at the end of each year into an account paying 4% interest. At age 65, the person will use the entire account balance to purchase a 15-year 5% annuity-immediate with annual payments of $10,000. Find R. Solution:arrow_forwardAssume that a pension plan offers to pay $500,000 on a person's retirement (his/her sixty-fifth birthday) or a semi-annual annuity for the remainder of the person's life - i.e., starting 6 months from the date of retirement and including his/her date of death. Interest rates are 7 percent compounded annually, and a person's life expectancy has been determined statistically as being 78.5 years. Calculate the amnunt of the annuity that would make a person indifferent between the options? A person joins a pension plan at age 40 (40" birthday). How much will s/he have to pay into the pension fund each year in order to accumulate a balance of $500,000 by the time s/he retires (age 65)? Assume that the final payment is on his/her 60th birthday. Interest rates are 9% compounded semi-annually.arrow_forwardDetermine the present value of future contributions to a pension plan for a person aged 35, earning 30.000$ per year and expecting to retire at 65. The pension plan requires contributions of 5% of salary and the employee expects to receive average annual salary increases of 3%. Use an annual effective rate of interest of 7% and assume contributions are made at the end of each year.arrow_forward
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