You are the finance manager for a particular company. The company plans to purchase $2,000,000 in new assembly line machinery in 5 years. (Use Table 11-1 andTable 11-2. Round your answers to the nearest cent.)(a) How much (in $) must be set aside now at 6% interest compounded semiannually to accumulate the $2,000,000 in 5 years?$ 1488187.83(b) If the inflation rate on this type of equipment is 7% per year, what will be the cost (in $) of the equipment in 5 years, adjusted for inflation?$ 2805103.46(c) Use the inflation-adjusted cost of the equipment to calculate how much (in $) must be set aside now.$(d) Use the present value formula to calculate how much (in $) would be required now if you found a bank that offered 6% interest compounded daily to obtain thevalue found in part b. (Ignore leap years in calculation.)$ 2078122.99

(FVinflated =PV×(1+i)n), FVinflated =$2,000,000×(1+0.07)5.FVinflated…

Answered: You are the finance manager for a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose an individual makes an initial investment of $2,000 in an account that earns 7.2%, compounded monthly, and makes additional contributions of $100 at the end of each month for a period of 12 years. After these 12 years, this individual wants to make withdrawals at the end of each month for the next 5 years (so that the account balance will be reduced to $0). (Round your answers to the nearest cent.) (a) How much is in the account after the last deposit is made?$ (b) How much was deposited?$ (c) What is the amount of each withdrawal?$ (d) What is the total amount withdrawn?$
Your company borrows $300,000 from the investment bank for building upgrades. It agrees for a (5) years loan with annual payment of $45,000 for first four payments, and the final payment on the 5th year should be $170,000. Calculate the annual payment in the first four years, interest rate, and the final payment at year 5. |
A local Dunkin’ Donuts franchise must buy a new piece of equipment in 5 years that will cost $97,000. The company is setting up a sinking fund to finance the purchase. What will the quarterly deposit be if the fund earns 8% interest? (Use Table 13.3.) (Do not round intermediate calculations. Round your answer to the nearest cent.) Quarterly deposit -
A corporation decides to deposit a fixed payment per quarter into an account earning 9% interest per year, compounded quarterly, in order to create a sinking fund so they will have $125,000 to replace some machinery in 5 years. How much interest does the account earn in the first quarter of year 3? (Enter an answer correct to the nearest cent.).
Choi Home Repair needs to accumulate $22,000 in 6 years to purchase new equipment. What sinking fund payment (in $) would they need to make at the end of each three months, at 4% interest compounded quarterly? Use Table 12-1. (Round your answer to the nearest cent.) $
Suppose an individual makes an initial investment of $1,400 in an account that earns 7.0%, compounded monthly, and makes additional contributions of $100 at the end of each month for a period of 12 years. After these 12 years, this individual wants to make withdrawals at the end of each month for the next 5 years (so that the account balance will be reduced to 50). (Round your answers to the nearest cent) (a) How much is in the account after the last deposit is made? (b) How much was deposited? 1 (e) What is the amount of each withdrawal? (0) What is the total amount withdrawn? - 3 Need Help?
(b) The company is considering purchasing a new delivery truck for $1,200,000. The intention is to obtain a 5-year loan from their bank, at an interest rate of 9% per annum. Annual payments are expected to be made on the loan. Required:i. Calculate Micron Industries’ annual payment on this loan. ii. Prepare the 5-year Amortization Schedule for this loan, clearly showing the interest and principal payment annually.
6) $25,000 is deposited at t= 0 into an account earning 4% effective annual interest. At the end of each year, the interest earned in that year plus an additional $500 is withdrawn from this account and put into another account earning 2% effective annual interest. Find the accumulated value in the second account after 50 years (when the first account is completely depleted.) Also, fill in the following table (or, redraw the table on your solution sheet being handed in and fill it in). Year Amount in 1st account Amount deposited into 2nd account 0 2 3 ... B 49 50
TABLE 13.3 6 Sinking fund table based on $1 Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 24 25 28 32 36 40 2% 1.0000 0.4951 0.3268 0.2426 0.1922 0.1585 0.1345 0.1165 0.1025 0.0913 0.0822 0.0746 0.0681 0.0626 0.0578 0.0537 0.0500 0.0467 0.0438 0.0412 0.0329 0.0312 0.0270 0.0226 0.0192 0.0166 3% 1.0000 0.4926 0.3235 0.2390 0.1884 0.1546 0.1305 0.1125 0.0984 0.0872 0.0781 0.0705 0.0640 0.0585 0.0538 0.0496 0.0460 0.0427 0.0398 0.0372 0.0290 0.0274 0.0233 0.0190 0.0158 0.0133 4% 1.0000 0.4902 0.3203 0.2355 0.1846 0.1508 0.1266 0.1085 0.0945 0.0833 0.0741 0.0666 0.0601 0.0547 0.0499 0.0458 0.0422 0.0390 0.0361 0.0336 0.0256 0.0240 0.0200 0.0159 0.0129 0.0105 5% 1.0000 0.4878 0.3172 0.2320 0.1810 0.1470 0.1228 0.1047 0.0907 0.0795 0.0704 0.0628 0.0565 0.0510 0.0463 0.0423 0.0387 0.0355 0.0327 0.0302 0.0225 0.0210 0.0171 0.0133 0.0104 0.0083 "Sinking fund table is the reciprocal of the ordinary annuity table. 6% 1.0000 0.4854 0.3141 0.2286 0.1774 0.1434 0.1191 0.1010 0.0870…
A business must raise $70,000 in 5 years. What should be the size of the owners' quarterly payment to a sinking fund paying 3% compounded quarterly? (Round your answer to the nearest cent.) $ Need Help? Read It
Cline Corporation deposits $75,000 every quarter in a savings account (beginning at the end of the current quarter) for the next six years so that it can purchase a new piece of machinery at the end of six years. The interest rate is 4%. How much money will Cline Corporation have at the end of six years? (Use spreadsheet software or a financial calculator to calculate your answer. Do not round any intermediary calculations, and round your final answer to the nearest dollar.) Group of answer choices $2,043,240 $2,023,010 $2,931,195 $1,126,935
Sampson Company just purchased a piece of equipment with a value of $53,300. Sampson financed this purchase with a loan from the bank and must make annual loan payments of $13,000 at the end of each year for the next five years. Interest is compounded annually on the loan. What is the interest rate on the bank loan? Round your answer to the nearest whole number.fill in the blank 1 % 2. Simon Company needs to accumulate $200,000 to repay bonds due in six years. Simon estimates it can save $13,300 at the end of each semiannual period at a local bank offering an annual interest rate of 8% compounded semiannually. Calculate the amount accumulated at the end of six years. Round your answer to the nearest whole dollar.$fill in the blank 2 Will Simon have enough money saved at the end of six years to repay the bonds?

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