Scenario 1 (20 marks) (a) Walmart Toys owes a toy manufacturer, Import Dragons, two loans: (i)...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Scenario 1 (20 marks) (a) Walmart Toys owes a toy manufacturer, Import Dragons, two loans: (i) $30000 due in two years with interest at 11% compounded semi-annually. (ii) $25000 due in fifteen months with interest at 9% compounded quarterly. If the company wants to discharge these debts by making two equal payments, the first now and the second eighteen months from now, what is the size of the two payments if money is now worth 8.4% compounded monthly? Let the focal date be now. (b) Due to the current financial status of Walmart Toys, one of the financial consultant suggested that Walmart Toys should repay the two loans by making 8 equal payments at the end of every three months. Suppose the interest rate is 10% compounded monthly and the first payment is made three months from now, what is the size of each payment? Scenario 2 (30 marks) (a) Frank and Caroline Archibald has set up a fund of $30000 today for the piano lessons of their daughter, Brenda, over the next twelve years. If interest is 6.21% compounded monthly, what is the size of each month-end withdrawal from the fund? (b) Caroline would like to clear two debt payments, $2600 due one year ago and $2400 due two years from now, by negotiating a replacement of two equal payments due one year from now and four years from now. What is the size of the equal payments if money is worth 9.6% p.a. compounded semi-annually? Let the focal date be four years from now. (c) To make their financial status more stable in the near future, the Archibalds sold their car and invest the proceeds of $15,000 to earn 4.84% compounded monthly. After 45 months, the Archibalds converted all the investment to a two-year annuity, earning an interest rate of 9.36% p.a. compounded monthly. How much can the Archibalds withdraw at the end of each month? Scenario 3 (30 marks) (a) André Langevin engages in a rental agreement requires the payment of $900 at the beginning of each month. However, he would like to negotiate with a single payment at the beginning of the rental year. How much should the landlord accept instead of twelve-monthly payments if money is worth 8% compounded quarterly? (b) To develop for financial stability in his retirement years, André put aside a lump sum of money and invest in a fifteen-year annuity. The first regular monthly payment of $1500 will be paid 3.5 years from now. Based on a discount rate of 8.25% compounded monthly, how much should André put aside today? (c) Instead of buying the fifteen-year annuity, André decides to invest in a perpetuity-type of investment. What amount is required to fund a perpetuity now that allows André to withdraw $3000 at the end of each quarter, suppose the funds can be invested to earn 5% compounded monthly, and the first withdrawal is made 3 months from now. ~ END - Scenario 1 (20 marks) (a) Walmart Toys owes a toy manufacturer, Import Dragons, two loans: (i) $30000 due in two years with interest at 11% compounded semi-annually. (ii) $25000 due in fifteen months with interest at 9% compounded quarterly. If the company wants to discharge these debts by making two equal payments, the first now and the second eighteen months from now, what is the size of the two payments if money is now worth 8.4% compounded monthly? Let the focal date be now. (b) Due to the current financial status of Walmart Toys, one of the financial consultant suggested that Walmart Toys should repay the two loans by making 8 equal payments at the end of every three months. Suppose the interest rate is 10% compounded monthly and the first payment is made three months from now, what is the size of each payment? Scenario 2 (30 marks) (a) Frank and Caroline Archibald has set up a fund of $30000 today for the piano lessons of their daughter, Brenda, over the next twelve years. If interest is 6.21% compounded monthly, what is the size of each month-end withdrawal from the fund? (b) Caroline would like to clear two debt payments, $2600 due one year ago and $2400 due two years from now, by negotiating a replacement of two equal payments due one year from now and four years from now. What is the size of the equal payments if money is worth 9.6% p.a. compounded semi-annually? Let the focal date be four years from now. (c) To make their financial status more stable in the near future, the Archibalds sold their car and invest the proceeds of $15,000 to earn 4.84% compounded monthly. After 45 months, the Archibalds converted all the investment to a two-year annuity, earning an interest rate of 9.36% p.a. compounded monthly. How much can the Archibalds withdraw at the end of each month? Scenario 3 (30 marks) (a) André Langevin engages in a rental agreement requires the payment of $900 at the beginning of each month. However, he would like to negotiate with a single payment at the beginning of the rental year. How much should the landlord accept instead of twelve-monthly payments if money is worth 8% compounded quarterly? (b) To develop for financial stability in his retirement years, André put aside a lump sum of money and invest in a fifteen-year annuity. The first regular monthly payment of $1500 will be paid 3.5 years from now. Based on a discount rate of 8.25% compounded monthly, how much should André put aside today? (c) Instead of buying the fifteen-year annuity, André decides to invest in a perpetuity-type of investment. What amount is required to fund a perpetuity now that allows André to withdraw $3000 at the end of each quarter, suppose the funds can be invested to earn 5% compounded monthly, and the first withdrawal is made 3 months from now. ~ END -
Expert Answer:
Answer rating: 100% (QA)
Scenario 1 20 marks a i Walmart Toys owe a toy manufacturer Import Dragons two loans the first is 30000 due in two years with interest at 11 compounded semiannually and the second is 25000 due in fift... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Waldon Toys owes $3000 due in 2 years with interest at 11% compounded semi-annually and $2500 due in 15 months at 9% compounded, quarterly. If the company wants to discharge these debts by making two...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
- A large, open bucket of water sits on a table. The height of the water level in the bucket is 4 m above the surface of the table. A small hole is made in the bucket at a distance of 10 cm above the...
-
During the year, Xenoc produces 1,200 pairs of speakers and sells 1,000 pairs. Required What is net income using full costing?
-
Selected financial data regarding current assets and current liabilities for ACME Corporation and Wayne Enterprises, are as follows: Required: 1. Calculate the current ratio for ACME Corporation and...
-
How far in advance of trial must a motion for summary judgment be filed?
-
As seen in Problem 3.109, silicon carbide nanowires of diameter D = 15 nm can be grown onto a solid silicon carbide surface by carefully depositing droplets of catalyst liquid onto a flat silicon...
-
Find the inflection point(s) of the function f(x) = 5e smaller x-value (x, y) = larger x-value (x, y) = Need Help? Read It Watch It
-
RZNY, LP., is a calendar-year, cash-basis limited partnership. Marc Liu, an individual, owns a 55% interest in RZNY as a general partner. During Year 1, RZNY had the following results: 1. Sales -...
-
What is the initial velocity if the mass is 0.150kg and the spring PE is 0.14625J the spring PE is 0.14625J and the spring compression is 0.05m
-
After 6 months, the Central Bank cuts interest rates to 3% and the analysts update their forecasts as follows. Economic Outlook Probability Stock 1 return Stock 2 return Market Positive 35% 14% 38%...
-
Cobb, an unmarried individual, had an adjusted gross income of $200,000 in 2023 before any IRA deduction, taxable Social Security benefits, or passive activity losses. Cobb incurred a loss of $30,000...
-
A heated copper bar placed in an air flow perpendicular to its axis. The characteristics of the bar are the following: Copper: p=8940 kg/m, Cp = 380 J/kg.K, = 385 W/m.K Bar: d=12mm, L= 80mm, T = 20C...
-
Solve for y. Assume that all other variables are nonzero. 81 (y+w) -3=5R y = (Simplify your answer. If there is more than 1 answer, use a comma to separate answers.
-
Designate whether the supplies and equipment are indicated or not indicated for performing the skill of hand hygiene.
-
4. Assuming 6-bit words to store the signed numbers in a computer, perform the operations indicated below using the 2's complement binary representations of the decimal numbers, verify the results by...
-
Let X be a random variable taking on values a1, a2, . . . , pr with probabilities p1, p2, . . . , pr and with E(X) = μ. Define the spread of X as follows: This, like the standard deviation, is a...
-
How should the results of installment sales be reported on the income statement?
-
George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is...
-
On January 1, 2012, Palmer Company leased equipment to Woods Corporation. The following information pertains to this lease. 1. The term of the noncancelable lease is 6 years, with no renewal option....
-
Describe the relationship between the main processor and coprocessor in a system with which you are familiar or one that you discover through Web research.
-
The instruction set of a certain processor does not have the JLE, JLT, JGE (jump less equal, less than, and greater or equal), and JGT instructions. Assume the process does not have all other...
-
Discuss the possibility of an n-address machine, where n > 3.
Study smarter with the SolutionInn App