FINANCIAL ACCOUNTING FUND. W/CONNECT
FINANCIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259693168
Author: Wild
Publisher: MCG
Question
Book Icon
Chapter B, Problem 18E

a.

To determine

Calculate the amount that is to be deposited today to receive $60,000 in four years.

a.

Expert Solution
Check Mark

Explanation of Solution

Present Value:

Present value refers to the current value of future sum of money in lump sum or in instalments with a stated rate of interest.

Present value = (Present value factorfor 4 years at 9%)×Amount expected to receive=0.7084×$60,000=$42,504

Therefore, the present value of the amount that is to be deposited today to receive $60,000 in four years is $42,504.

b.

To determine

Calculate the amount that is to be deposited today to receive $15,000 while graduating.

b.

Expert Solution
Check Mark

Explanation of Solution

Present Value:

Present value refers to the current value of future sum of money in lump sum or in instalments with a stated rate of interest.

Present value = (Present value factorfor 2 years at 8%)×Amount expected to receive=0.8573×$15,000=$12,859.60s

Therefore, the present value of the amount that is to be deposited today to receive $15,000 while graduating is $12,859.60.

c.

To determine

Identify whether $463 currently or $1,000 will be received after 10 years from now.

c.

Expert Solution
Check Mark

Explanation of Solution

Future value:

The future value is value of present amount compounded at an interest rate until a particular future date.

Present Value:

Present value refers to the current value of future sum of money in lump sum or in instalments with a stated rate of interest.

Calculate the future value of $463 at 9% for 10 years:

Future value=Amount deposited( Present value factorof 10 years at 9% interest)=$4630.4224 =$1,096.12

Therefore, the future value of $463 is $1,096.12.

Calculate the present value of $1,000 will be received after 10 years from now:

Present value=Amount deposited×(Present value factor of 10 years at 9% interest)                     =$1,000×0.4224= $422.40s

Therefore, the present value of $1,000 will be received after 10 years from now is $422.40

d.

To determine

Calculate the cost of college parking sticker in eight years.

d.

Expert Solution
Check Mark

Explanation of Solution

Future value:

The future value is value of present amount compounded at an interest rate until a particular future date.

Calculate the cost of college parking sticker in eight years:

Future value=Amount deposited( Present value factorof 8 years at 5% interest)=$900.6768 =$132.98

Therefore, the cost of college parking sticker in eight years is $132.98.

e.

To determine

Calculate the cost of new home in eight years.

e.

Expert Solution
Check Mark

Explanation of Solution

Future value:

The future value is value of present amount compounded at an interest rate until a particular future date.

Calculate the cost of new home in eight years.

Future value=Amount deposited( Present value factorof 8 years at 5% interest)=$158,5000.4665 =$339,764.20

Therefore, the cost of new home in eight years is $339,764.20.

f.

To determine

Calculate the amount that will be paid today for given type of investment in this situation.

f.

Expert Solution
Check Mark

Explanation of Solution

Present Value:

Present value refers to the current value of future sum of money in lump sum or in instalments with a stated rate of interest.

Annuity:

An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time.

Calculate the amount that will be paid today for given type of investment in this situation by using a present value of a lump sum part:

Present value = (Present value factor of 10 years at 6% interest )× Amount to be received=0.5584×$10,000=5,584

Calculate the amount that will be paid today for given type of investment in this situation by using a present value of an annuity part:

Present value = (Present value of annuity factor of 10 years at 6% interest )× Amount to be received=7.3601×$400=$2,944

Therefore, the amount that will be paid today for given type of investment in this situation is [$5,584+$2,944] $8,528.

g.

To determine

Calculate the present value for the given transaction.

g.

Expert Solution
Check Mark

Explanation of Solution

Present Value:

Present value refers to the current value of future sum of money in lump sum or in instalments with a stated rate of interest.

Annuity:

An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time.

Calculate the present value:

Present value = (Present value of annuity factor of 20 years at 6% interest )× Amount to be received=11.4699×$500,000=$5,734,950

Therefore, the present value is $5,734,950.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Please make a trial balance, adjusted trial balance, Income statement. end balance ,owners equity statement, Balance sheet , Cash flow statement ,Cash end balance
Activity Based Costing - practice problem Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities 1. Materials handling 2. Machine setups Cost Drivers Number of requisitions Number of setups Total cost $35,000 27,500 3. Quality inspections Number of inspections 27,000 $89.500 The cost driver volume for each product was as follows: Cost Drivers Instruments Gauge Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 Insructions (a) Determine the overhead rate for each activity. (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.
Bodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Expected Use of Estimated Cost Drivers by Product Cost Drivers Overhead Leashes Collars Purchase orders $260,000 70,000 60,000 Parts 400,000 300,000 500,000 Labor hours 300,000 15,000 10,000 $960,000 Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes and collars for each activity cost pool. (c) Compute the total costs assigned to each product.
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education