# Accounting problems solved

Question # 00004433 Posted By: neil2103 Updated on: 12/02/2013 11:31 PM Due on: 12/31/2013
Subject Accounting Topic Accounting Tutorials:
Question
1 What will a deposit of \$5,000 left in the bank be worth under the following conditions?
Left for 5 years at 6% interest?
Left for 5 years at 6% interest compounded monthly?
Left for 5 years at 6% interest compounded continuously?
Left for 10 years at 6% interest?
Left for 10 years at 8% interest?
2 Your firm has a \$10,000 note receivable due from a customer. How much is the note worth today if:
The note is due in 2 years and the discount rate is 8%?
The note is due in 3 years and the discount rate is 15%?
The note is due in 3 years and the discount rate is 10% compounded monthly?
3 How much will the following people have for retirement?
Alex deposits \$100 a month for 20 years with a 6% return.
Beth deposits \$100 a month for 30 years with a 6% return.
Chris deposits \$100 a month for 30 years with a 9% return.
4 A lottery prize advertised as "\$1 million" is actually paid as \$25,000 a year for 40 years.
Find the present value of the \$25,000 a year for 40 years using a 5% discount rate.
Find the present value using an 8% discount rate.
The winner of this lottery is offered \$500,000 now instead of the series of payments that total \$1 million. If this person believes that they can earn 5% interest, which option should they pick? Explain.

5 Find the monthly payments for a \$15,000 car loan with the following terms. Also find the total amount that will be paid over the life of the loan.
4 year loan at 8% interest (compounded monthly)
Total paid
6 year loan at 12% interest (compounded monthly)
Total paid
6 Find the amount that must be saved each year to reach the following goals.
Darby needs \$20,000 in 10 years and can receive 4% interest.
Fran needs \$800,000 in 35 years and can receive 8% interest.
7 George has \$20,000 in credit card debt at 18% interest compounded monthly. How many months will it take to pay off this amount:
If he makes a \$350 payment each month?
If he makes a \$520 payment each month?
8 What is the interest rate on loans with the following terms?
On \$10,000 borrowed, pay \$2,000 a year for 6 years.
On \$2,000 borrowed, pay \$100 a month for 25 months.
Jack deposits \$3,000 a year at 4% interest. In how many years will he have \$50,000?
How many years would it take \$100 to become \$1,000 at 15% interest?
You have paid \$1,000 for an investment that will pay back \$1,200 in 3 years. What interest rate does that represent?
A preferred stock is expected to pay an \$8 annual dividend every year forever. If comparable market interest rates are 9%,
what is the value of this stock?
Amy's parents deposited \$10,000 in a savings account earning 3% interest compounded monthly when she was born.
How much will the account have when Amy is 21 years old?
Beth is to receive \$5,000 in 10 years. If Beth could be earning an 11% return on this money, what is it's present value?
Cameron has been depositing \$50 a month into a 6% account for the last 5 years. How much is in his account?
Dave has recently retired, and is being paid an annuity of \$24,000 a year for the rest of his life.
Statistically, he expects to live for 18 years. Using a 7% discount rate, find the present value of the annuity.
Tutorials for this Question
1. ## Solution: Accounting problems solved

Tutorial # 00004208 Posted By: neil2103 Posted on: 12/02/2013 11:32 PM
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