MANAGERIAL ACCOUNTING FOR MANAGERS
6th Edition
ISBN: 9781265365615
Author: Noreen
Publisher: MCG
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Chapter 7A, Problem 7A.3E
To determine
Concept Introduction:
The time value of money is a concept that is applied to evaluate the projects having future
lump sum amount to be invested today.
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Assume your goal in life is to retire with one million dollars. How much would you need to save at the end of each year if interest rates average 4% and you have a 25-year work life?
Question 7Answer
a.
$40,000
b.
$24,012
c.
$200,204
d.
$752,952
sanju
QUESTION 9
Bob buys a property that costs $1,000,000. The property is projected to
generate NOI as follows:
Year
NOI
$100,000
1
2
$105,000
3
$110,000
Bob will own the property for two years.
Bob will sell the property at the end of year 2 at a cap rate that is 250 basis
points lower than the cap rate at which he bought the property.
What is Bob's annualized IRR for the investment in question
A. 26.21%
B. 30.47%
C. 27.78%
D. 14.89%
Chapter 7A Solutions
MANAGERIAL ACCOUNTING FOR MANAGERS
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- Funding a retirement goal. Austin Miller wishes to have 800,000 in a retirement fund 20 years from now. He can create the retirement fund by making a single lump-sum deposit today. a. If upon retirement in 20 years, Austin plans to invest 800,000 in a fund that earns 4 percent, what is the maximum annual withdrawal he can make over the following 15 years? b. How much would Austin need to have on deposit at retirement in order to withdraw 35,000 annually over the 15 years if the retirement fund earns 4 percent? c. To achieve his annual withdrawal goal of 35,000 calculated in part b, how much more than the amount calculated in part a must Austin deposit today in an investment earning 4 percent annual interest?arrow_forwarddestion How much will Bill Rodgers need to invest today so that he may withdraw $7,000 each year for the next 9 years, assuming a rate of 11 percent compounded annually? (Use the tables in the textbook.) O a. $38,597 Ob. $38,759 Oc $41,322 C. Od. $41,233 > AMoving to another question will save this response. Show All Informative Top....docx MacBook Airarrow_forwardConsider these two alternatives. Alternative 2 $6,400 $2,000 $520 $1,300 8 years 12 years a. Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? The annual MARR is 18% per year. b. Determine the life of Alternative 1 for which the AWs are equal. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year. More Info N 1 2 3 4 5 a. The capital investment of Alternative 2 would have to be $ or less for the initial decision to be reversed. (Round to the nearest dollar.) 6 7 8 9 10 11 12 13 14 15 Tactor To Find F Given P FIP 1.1800 1.3924 1.6430 1.9388 2.2878 2.6996 3.1855 3.7589 4.4355 5.2338 6.1759 7.2876 8.5994 10.1472 11.9737 Vorurt actor To Find P Given F PIF 0.8475 0.7182 0.6086 0.5158 0.4371 0.3704 0.3139 0.2660 0.2255 0.1911 0.1619 0.1372 0.1163 Capital…arrow_forward
- :25 You have researched your dream around-the-world vacation and determined that the total cost of the vacation will be $24,000. You feel you can earn an APR of 9.9 percent compounded monthly and plan to save $260 per month until you reach your goal. How many years will it be until you reach your goal and enjoy your well-deserved vacation? Multiple Choice 6.56 years 7.69 years 5.30 years 6.00 years 5.74 yearsarrow_forwardChapter 8 Consumer Purchasing Strategies and Legal Protection Financial Planning Question 1arrow_forwardquestion 15arrow_forward
- suppose you are planning to buy a home in 8 years from now that costs you 48854 OMR, How much should you save each year in your bank account that pays 6.012 percent to reach your goal? Select one: a. 3786.63 b. None of the options c. 483737.65 d. 4481.32 e. 4933.90arrow_forwardAssume your goal in life is to retire with four million dollars. How much would you need to save at the end of each year if interest rates average 6% and you have a 20−year work life? A. $1,247,219 B. $108,737 C. $400,000 D. $12,000arrow_forwardprd.2arrow_forward
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