Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter A3, Problem 8CE
To determine
Concept introduction:
Time value of money:
Time value of money is the concept that differentiates the value of money received today and the value of same money received in future. According to this concept, the same amount of money to be received in future shall have lower present value (value of the money today) due to the interest that could be earned on that money.
To calculate:
The future value.
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Suppose a certain manufacturer deposits $3,000 at the beginning of each 3
month period for 6 years in an account paying 8% interest compounded
quarterly. (Round your answers to the nearest cent.)
(a) How much (in $) will be in the account at the end of the 6 year period?
(b) What is the total amount (in $) of interest earned in this account?
Complete the following table by using Table 15.1. (Do not round intermediate calculations. Round your answers to the nearest cent.):
Selling price: $237,000
Down payment: $47,400
Amount mortgage: ??
Rate: 6.00%
Years: 15
Monthly payment: ??
First payment broken down into-- Interest: ?? Principal: ??
Balance at end of month: ??
Complete the following amortization chart by using Table 15.1.
Note: Round your "Payment per $1,000" answer to 5 decimal places and other answers to the nearest cent.
Selling price of home: $198,000
Down payment: $60,000
Principal (loan): 138,000
Rate of interest: 6.5%
Years: 25
Payment per $1,000: ???
Monthly mortgage payment:????
TABLE 15.1
Amortization table (mortgage principal and interest per $1,000)
Rate
Interest Only
10 Year
15 Year
20 Year
25 Year
30 Year
40 Year
2.000
0.16667
9.20135
6.43509
5.05883
4.23854
3.69619
3.02826
2.125
0.17708
9.25743
6.49281
5.11825
4.29966
3.75902
3.09444
2.250
0.18750
9.31374
6.55085
5.17808
4.36131
3.82246
3.16142
2.375
0.19792
9.37026
6.60921
5.23834
4.42348
3.88653
3.22921
2.500
0.20833
9.42699
6.66789
5.29903
4.48617
3.95121
3.29778
2.625
0.21875
9.48394
6.72689
5.36014
4.54938
4.01651
3.36714
2.750
0.22917
9.54110
6.78622
5.42166
4.61311
4.08241
3.43728
2.875
0.23958
9.59848
6.84586
5.48361
4.67735
4.14892
3.50818
3.000…
Chapter A3 Solutions
Cornerstones of Financial Accounting
Ch. A3 - Prob. 1DQCh. A3 - Prob. 2DQCh. A3 - Prob. 3DQCh. A3 - Prob. 4DQCh. A3 - Prob. 5DQCh. A3 - Prob. 1CECh. A3 - Prob. 2CECh. A3 - Prob. 3CECh. A3 - Prob. 4CECh. A3 - Prob. 5CE
Ch. A3 - Use Future Value and Present Value Tables to Apply...Ch. A3 - Prob. 7CECh. A3 - Prob. 8CECh. A3 - Prob. 9CECh. A3 - Prob. 10CECh. A3 - Prob. 11ECh. A3 - Prob. 12ECh. A3 - Prob. 13ECh. A3 - Future Values and Long-Term Investments Portman...Ch. A3 - Prob. 15ECh. A3 - Prob. 16ECh. A3 - Prob. 17ECh. A3 - Present Values Phillips Enterprises signed notes...Ch. A3 - Present Values Krista Kellman has an opportunity...Ch. A3 - Prob. 20ECh. A3 - Prob. 21ECh. A3 - Future Value of a Single Cash Flow Jenkins...Ch. A3 - Prob. 23ECh. A3 - Installment Sale Baileys Billiards sold a pool...
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- You have taken a loan of $78,000.00 for 20 years at 4.9% compounded quarterly. Fill in the table below, rounding all values to the nearest cent. Note that the principal column is listed before the interest column even though the interest calculation is done first. Many lending institutions use this order in the amortization schedules they provide to their customers. Payment number Payment amount Principal Amount Interest 0) 1) 2) 3) $ S $ $ s Balance $78,000.00 $arrow_forwardUse Table 12-1 to solve. Suppose a certain manufacturer deposits $7,000 at the beginning of each 3 month period for 8 years in an account paying 8% interest compounded quarterly. (Round your answers to the nearest cent.) (a) How much (in $) will be in the account at the end of the 8 year period? (b) What is the total amount (in $) of interest earned in this account?arrow_forwardVishnuarrow_forward
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- Suppose you deposit $1,030.00 into an account 4.00 years from today. Exactly 13.00 years from today the account is worth $1,677.00. What was the account's interest rate? Submit Answer format: Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places (ex: 0.09243)) Show Hintarrow_forwardComplete the following table by using Table 15.1. ( Do not round intermediate calculations.Round your answers to the nearest cent.): Selling price: $158,000 Down payment: $31,000 Amount mortgage: ?? Rate: 6.50% Years: 30 Monthly payment: ?? First payment broken down into-- interest: ?? principle:?? Balance at end of month: ??arrow_forwardPrepare an amortization schedule for a three-year loan of $117,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan? Note: Leave no cells blank. Enter '0' where necessary. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Year 1 2 3 $ Beginning Balance 117,000.00 Total Payment Total interest Interest Payment Principal Payment Ending Balancearrow_forward
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