The terms of three different contracts follow. 1. $8,000 received at the beginning of each year for

Question:

The terms of three different contracts follow.

1. $8,000 received at the beginning of each year for ten years, compounded at a 6 percent annual rate.

2. $8,000 received today and $20,000 rece3ived ten years from today. The relevant interest rate is 12 percent.

3. $8,000 received at the end of Years 4, 5, and 6. The relevant annual interest rate is 10 percent.

REQUIRED:

a. Compute the present value of each contract.

b. Compute the equivalent value of each contract at the end of years 5 and 10.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Accounting in an Economic Context

ISBN: 978-0470635292

8th Edition

Authors: Jamie Pratt

See More Books

Question Posted: Nov 17, 2011 12:36 PM

See More Questions

Mick contributed $5000 at the beginning of each year for 25 years to his RRSP. Assume that the RRSP earned 8% compounded annually. What percentage of the RRSPs value after 25 years comes from...
Roni Sue deposited $1,500 at the beginning of each year for three years at an annual interest rate of 9%. Find the future value and total interest manually?
Mick contributed $5000 at the beginning of each year for 25 years to his TFSA. The funds earned 6% compounded annually. What was the TFSA's value after 25 years?
Herbs Pty Ltd is considering investing in a new herb packaging machine. The machine is estimated to cost $80,000 which can last for 7 years before it becomes too costly to maintain and can be sold...
Techuxia Corporation worked on four jobs during October: Job A256, Job A257, Job A258, and Job A260. At the end of October, the job cost sheets for these jobs contained the following data: Jobs A256...
If you were asked whether a large university such as Tennessee or Michigan with a large seating capacity for their football stadiums should build a new football stadium, how would you respond and...
Suppose $F(S, t)$ is the forward price of a commodity with no storage cost and governed by $\mathrm{d} S(t)=\mu \mathrm{d} t+\sigma \mathrm{d} z$ and terminating at time $T$. What is the...
Barbara Flynn sells papers at a newspaper stand for $.35. The papers cost her $.25, giving her a $.10 profit on each one she sells. From past experience Barbara knows that: (a) 20% of the time she...
A meteorologist is 3.8 km from a thunderstorm when she sees a lightning bolt emerge from the storm. In how many seconds will she hear thunder after seeing the lightning? Assume air temperatur = 20C...
1. What are the main arguments that you will need to counter? That is, what are the reasons and rationalizations you will need to address? 2. What is at stake should you not convince King Bernard to...
Wharton Company is planning to make the following investments. 1. $1,000 at the end of each year for five years at a 10 percent annual rate. Wharton Company will leave the accumulated principal and...
J. Hartney, president of Doyle Industries, has a choice of three bonus contract. The fist option is to receive an immediate cash payment of $25,000. The second option is a deferred payment of...
Determine whether the statement is true or false. If it is true, explain why. If it is false, explain why or give an example that disproves the statement. If f (x) = 2x - x 2 + 1/3 x 3 - converges...
Explain it in 150 words Hard for you to imagine a world without VIDEO but it is not that long ago that this existed. They say that "video killed the radio star". Do you think that radio has any...
can I get somebody to help me this answers Skill Areas Communication Experiences Contributing to the Skill Development I have one year on the debate team at school. Evidence Supporting that the...
Explain the impact on the numerator and denominator for dilutive EPS for both convertible bonds and convertible preferred stock.
A president of a manufacturing company called you to seek your advice with respect to the information systems department. She told you that at the moment, being relatively small, they use the...
Once a research endeavor is completed and the investigator reports. What occurred in the study, the Method section is written in Blank Space tense? Once a research endeavor is completed and the...
The ledger of Waite Corporation at December 31, 2025, after the books have been closed, contains the following stockholders' equity accounts. A review of the accounting records reveals this...
Using the parallel-axis theorem, determine the product of inertia of the area shown with respect to the centroidal x and y axes. 6 in. 9 in. 9 in- 4.5 in. in. 4.5 in.
Solve the following boundary value problems. a. f' = x + such that f(1) = b./ = 5 + 2h such that h(4) = 2 c. g = 10- 2g such that g(0) = 0 d. y + y=sin(x) such that y() = 1
You work in the finance and investment department of Mega Industries, which recently purchased several small high-tech companies. An additional company, Microline Corporation, is presently under...
You are an investment analyst for Timken Brothers, a small brokerage firm. Recent developments in the medical equipment industry have caused a number of Timkens customers to inquire about two...
Tracy Sellers, a retired musical artist, and his two brothers own a substantial amount of the outstanding common stock of Avery Corporation, a young and fast-growing manufacturer of cartons,...
respond to the following : Hi Kassim, "Given that you have successfully applied these steps to pay down your car loan faster, how would you adapt this financial plan if you were to encounter a...
The Impact of Artificial Intelligence in the Accounting Profession: Challenges and Opportunities: The accounting profession has been undergoing significant transformations with the advent of...
The following is an alphabetical list of accounts and balances for J. Robinson, proprietorship at June 30, 2024 Accounts Payable $13,300 Notes Payable $31, 800, Accounts Receivable $10, 850 Prepaid...

The terms of three different contracts follow. 1. $8,000 received at the beginning of each year for

Question:

Step by Step Answer:

a Contract 1 Present value 8000 x Present value ...View the full answer

Financial Accounting in an Economic Context

Students also viewed these Accounting questions