Question

Starr Company decides to establish a fund that it will use 1 year from now to replace an aging production facility. The company will make a $94,000 initial contribution to the fund and plans to make quarterly contributions of $50,000 beginning in three months. The fund earns 4%, compounded quarterly. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "Table Factor" to 4 decimal places and final answer to the nearest whole dollar.)

What will be the value of the fund 1 year from now?

Mark Welsch deposits $7,100 in an account that earns interest at an annual rate of 8%, compounded quarterly. The $7,100 plus earned interest must remain in the account 4 years before it can be withdrawn. How much money will be in the account at the end of 4 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.)

Answer #1

**Solution 1:**

Computation of Value of fund one year from now | ||||

Quarterly Period | Beginning Balance | Deposit | Interest earned (Beginning balance * 1%) | Ending balance |

0 | $0 | $94,000 | $0 | $94,000 |

1 | $94,000 | $50,000 | $940 | $144,940 |

2 | $144,940 | $50,000 | $1,449 | $196,389 |

3 | $196,389 | $50,000 | $1,964 | $248,353 |

4 | $248,353 | $50,000 | $2,484 | $300,837 |

Therefore value of the fund 1 year from now = $300,837

**Solution 2:**

Deposit amount = $7,100

Interest rate = 8% annual, 2% quarterly

Periods = 4 years or 16 semiannual periods

Total money in account at the end of 4 years = $7,100 * (1+0.02) ^ 16

= $7,100 * 1.3728 = $9,747

On January 1, a company agrees to pay $23,000 in seven years. If
the annual interest rate is 2%, determine how much cash the company
can borrow with this agreement. (PV of $1, FV of $1, PVA of $1, and
FVA of $1) (Use appropriate factor(s) from the tables
provided. Round "Table Factor" to 4 decimal
places.)

On January 1, 2016, a company agrees to pay $26,000 in four
years. If the annual interest rate is 5%, determine how much cash
the company can borrow with this agreement. (PV of $1, FV of $1,
PVA of $1, and FVA of $1) (Use appropriate factor(s) from
the tables provided. Round "Table Factor" to 4 decimal
places.)

The Masterson family is setting up a vacation fund, and they
plan on depositing $2,300 per quarter in an investment that will
pay 12% annual interest. What amount will they have available for
their vacation at the end of 2 years? (PV of $1, FV of $1, PVA of
$1, and FVA of $1) (Use appropriate factor(s) from the
tables provided.)

Park Co. is considering an investment that requires immediate
payment of $26,945 and provides expected cash inflows of $8,500
annually for four years. Park Co. requires a 7% return on its
investments.
1-a. What is the net present value of this
investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1)
(Use appropriate factor(s) from the tables provided. Round
your present value factor to 4 decimals.)
Cash Flow
Select Chart
Amount
x
PV Factor
=
Present...

On January 1, 2018, Darnell Window and Pane issued $18.7 million
of 10-year, zero-coupon bonds for $7,209,660. (FV of $1, PV of $1,
FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
appropriate factor(s) from the tables provided.)

Determine the present value of the following single amounts (FV
of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1)
(Use appropriate factor(s) from the tables provided. Invested
Amount i = n = Future Value 1. $15,500 5% 12 2. $23,000 5% 6 3.
$35,000 11% 18 4. $56,000 6% 14

Canliss Mining Company borrowed money from a local bank. The
note the company signed requires five annual installment payments
of $20,000 beginning one year from today. The interest rate on the
note is 9%.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use appropriate factor(s) from the tables
provided.)
What amount did Canliss borrow? (Round your final answers
to nearest whole dollar amount.)
Table or
calculator function:
Payment:
n =...

Brief Exercise 14-4 Determining the price of bonds [LO14-2]
A company issued 8%, 10-year bonds with a face amount of $100
million. The market yield for bonds of similar risk and maturity is
6%. Interest is paid semiannually. At what price did the bonds
sell? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and
PVAD of $1) (Use appropriate factor(s) from the tables
provided. Enter your answers in whole
dollars.)

Determine the present value of the following single amounts (FV
of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
(Use appropriate factor(s) from the tables provided. Round your
final answers to nearest whole dollar amount.): Future Amount i = n
= Present Value
1. $20,000 7% 10
2. $14,000 8% 12
3. $25,000 12% 20
4. $40,000 10% 8

A company issued 6%, 15-year bonds with a face amount of $67
million. The market yield for bonds of similar risk and maturity is
6%. Interest is paid semiannually. At what price did the bonds
sell? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and
PVAD of $1) (Use appropriate factor(s) from the tables
provided. Enter your answers in whole dollars. Round final answers
to the nearest whole dollar.)

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