Compute the amount that can be borrowed under each of the following circumstance
ID: 2478261 • Letter: C
Question
Compute the amount that can be borrowed under each of the following circumstances: (PV of dollar1, FV of dollar1, PVA of dollar1, and FVA of dollar1 (Use appropriate factor(s) from the tables provided. Round your "Table value" to 4 decimal places.) A promise to repay dollar97,000 eight years from now at an interest rate of 7%. An agreement made on February 1. 2015. to make three separate payments of dollar17,000 on February 1 of 2016. 2017. and 2018. The annual interest rate is 10%. 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 dollar94,000 initial contribution to the fund and plans to make quarterly contributions of dollar45.000 beginning in three months. The fund earns 12%, compounded quarterly. (PV of dollar1, FV of dollar1, PVA of dollar1. and FVA of dollar11 (Use appropriate factor(s) from the tables provided. Round your "Future Value Factor" to 4 decimal places.) What will be the value of the fund 1 year from now? How much would you have to deposit today if you wanted to have dollar64 000 in three years? Annual interest rate is 10%. (PV of dollar1, FV of dollar1, PVA of dollar1, and FVA of dollar1) (Use appropriate factor(s) from the tables provided. Round your answer to the nearest whole dollar.) Assume that you are saving up for a trip around the world when you graduate in three years If you can earn 6% on your investments how much would you have to deposit today to have dollar18 000 when you graduate? (Round your answer to 2 decimal places.) Calculate the future value of an investment of dollar774 for nine years earning an interest of 10% (Round your answers to 2 decimal places.) Would you rather have dollar774 now or dollar1,800 nine years from now? SmallCircle Now SmallCircle Nine years from now Assume that a college parking sticker today costs dollar92 If the cost of parting is increasing at the rate of 6% per year how much will a college parting sticker cost in seven years' (Round your answer to 2 decimal places.) Assume that the average price of a new home is dollar132,500. If new homes are increasing at a rate of 8% per year how much will a new home cost in seven years? (Round your answer to 2 decimal places.) An investment will pay you dollar13,000 in 9 years, and it will also pay you dollar360 at the end of each of the next 9 years (years 1 thru 9) If the annual interest rate is 5% how much would you be willing to pay today for this type of investment? (Round your intermediate calculations and final answer to the nearest whole dollar.) A college student is reported in the newspaper as having won dollar13,500,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire dollar13.5 million now Instead she will receive dollar675 000 at the end of the year for each of the next 20 years If the annual interest rate is 7% what is the present value (today's amount) that she won? (ignore taxes). (Round your answer to nearest whole dollar.)Explanation / Answer
1./
OPTION 1
PRESENT VALUE = FUTURE VALUE * PVIF7%, 8 PERIODS
= $97000 * 0.5820
= $56454
OPTION2
= ANNUITY * PVIFA 10%, 3 PERIODS
= $17000 * 2.4869
= $42277
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2./
n = 4 PERIODS
i = 3% (12%/4)
INITIAL INVEST MENT = $94000
PERIODIC INVESTMENT $45000 * FVIFA 3%,4PERIODS
= $45000 * 4.1836
= 188262
FUTURE VALUE ($94000 + $188262) = $282262
3./
PRESENT VALUE
= $64000 * PVIF 10%, 3 PERIODS
= $64000 * 0.7513
= $48083
B./
PRESENT VALUE
= $18000 * PVIF 6%,3PERIODS
= $18000 * 0.8396
= $15113
C.1./
FUTURE VALUE
= $774 * FVIF 10%,9 PERIODS
= $774 * 2.3579
= $1825
C.2./
PRESENT VALUE
= $1800 * PVIF 10%,9 PERIOD
= $1800 * 0.4241
= $763.38
$774 NOW BECAUSE PV OF $1800 AFTER 9 YEARS IS LESS THAN $774
D./
FUTURE VALUE
= $92 * FVIF 6%, 7 PERIODS
= $92 * 1.5036
= $138.33
E./
FUTURE VALUE
= $132500 * FVIF 8%, 7 PERIODS
= $132500 * 1.7138
= $227078.5
F./
PRESENT VALUE
= $13000 * PVIF 5%, 9 PERIODS + $360 * PVIFA 5%,9PERIODS
= $13000 * 0.6446 + $360 * 7.1078
= $8379.8 + $2558.81
= $10938.61
G./
PRESENT VALUE
= $675000 * PVIFA 7%,20 PERIODS
= $675000 * 10.5940
= $7150950
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