UMUC ACC310 Chapter 6 Homework
Exercise 6-3 (Part Level Submission)
Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.)
What is the future value of $7,650 at the end of 8 periods at 8% compounded interest?(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
What is the present value of $7,650 due 8 periods hence, discounted at 11%?(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
What is the future value of 17 periodic payments of $7,650 each made at the end of each period and compounded at 10%?(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
What is the present value of $7,650 to be received at the end of each of 19 periods, discounted at 5% compound interest?(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
Exercise 6-6 (Part Level Submission)
Presented below are three unrelated situations.
(a)
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Your answer is correct. |
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Dwayne Wade Company recently signed a lease for a new office building, for a lease period of 11 years. Under the lease agreement, a security deposit of $14,120 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 10% per year. (Use the table below.)
| What amount will the company receive at the time the lease expires?(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) |
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(b1)
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Your answer is correct. |
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Serena Williams Corporation, having recently issued a $20,153,000, 15-year bond issue, is committed to make annual sinking fund deposits of $615,800. The deposits are made on the last day of each year and yield a return of 10%. (Use the table below.)
Will the fund at the end of 15 years be sufficient to retire the bonds? |
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Your answer is correct. |
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Serena Williams Corporation, having recently issued a $20,153,000, 15-year bond issue, is committed to make annual sinking fund deposits of $615,800. The deposits are made on the last day of each year and yield a return of 10%. (Use the table below.)
Determine the amount of deficiency.(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
(c)
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Your answer is correct. |
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Under the terms of his salary agreement, president Rex Walters has an option of receiving either an immediate bonus of $40,000, or a deferred bonus of $70,000 payable in 10 years. (Use the table below.)
Ignoring tax considerations, and assuming a relevant interest rate of 8%, which form of settlement should Walters accept?
Exercise 6-11 (Part Level Submission)
Sosa Excavating Inc. is purchasing a bulldozer. The equipment has a price of $106,000. The manufacturer has offered a payment plan that would allow Sosa to make 10 equal annual payments of $17,999, with the first payment due one year after the purchase.
Sosa could borrow $106,000 from its bank to finance the purchase at an annual rate of 10%. (Use the table below.)
Should Sosa borrow from the bank or use the manufacturer’s payment plan to pay for the equipment? |
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