1.Future Value Computations

Using the future values tables, solve the following:

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Round your answers to two decimal places.

Required:

What is the future value on December 31, 2025, of 10 cash flows of $20,000 with the first cash payment made on December 31, 2016, and interest at 10% being compounded annually?

$

What is the future value on June 30, 2026, of 20 cash flows of $15,000 with the first cash payment made on December 31, 2016, and the annual interest rate of 10% being compounded semiannually?

$

What is the future value on December 31, 2026, of 20 cash flows of $15,000 with the first cash payment made on December 31, 2016, and the annual interest rate of 10% being compounded semiannually?

2.Determining Loan Repayments

Jerry Rockness needs $40,000 to pay off a loan due on December 31, 2025. His plans included the making of 10 annual deposits beginning on December 31, 2016, in accumulating a fund to pay off the loan. Without making a precise calculation, Jerry made 3 annual deposits of $4,000 each on December 31, 2016, 2017, and 2018, which have been earning interest at 10% compounded annually.

Required:

What is the equal amount of each of the next 7 deposits for the period December 31, 2019, to December 31, 2025, to reach the fund objective, assuming that the fund will continue to earn interest at 10% compounded annually?

(Click here to access the time value of money tables to use with this problem.)

Round your answer to two decimal places.

$

3. Fund to Retire Bonds

At the beginning of 2016, Shanklin Company issued 10-year bonds with a face value of $1,000,000 due on December 31, 2025. Shanklin wants to accumulate a fund to retire these bonds at maturity by making annual deposits beginning on December 31, 2016.

Required:

How much must Shanklin deposit each year, assuming that the fund will earn 12% interest a year compounded annually?

(Click here to access the time value of money tables to use with this problem.)

Round your answer to two decimal places.

$

4. Cash Flow Amounts On December 31, 2023, Michael McDowell wants to have $60,000. He plans to make 6 deposits in a fund to provide this amount. Interest is compounded annually at 12%.

Required:

Compute the equal annual amounts that Michael must deposit assuming that he makes the first deposit on:

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Round your answers to two decimal places.

December 31, 2018.

$

December 31, 2017.

$

5. Value of an Annuity

Using the appropriate tables, solve each of the following:

(Click here to access the time value of money tables to use with this problem.)

Round your answers to two decimal places.

Required:

Beginning December 31, 2017, 5 equal withdrawals are to be made. Determine the equal annual withdrawals if $30,000 is invested at 10% interest compounded annually on December 31, 2016.

$

Ten payments of $3,000 are due at annual intervals beginning June 30, 2017. What amount will be accepted in cancellation of this series of payments on June 30, 2016, assuming a discount rate of 14% compounded annually?

$

Ten payments of $2,000 are due at annual intervals beginning December 31, 2016. What amount will be accepted in cancellation of this series of payments on January 1, 2016, assuming a discount rate of 12% compounded annually?

$

6. Serial Installments; Amounts Applicable to Interest and Principal

Ronald McDuffie purchases a new car at a cost of $14,400. He pays $3,000 down and issues an installment note payable by which he promises to pay the balance in 18 equal monthly installments, which include interest at an annual rate of 18% on the remaining unpaid balance at the beginning of each month starting with the first month after the purchase.

Required:

Compute the equal installment payments.

(Click here to access the time value of money tables to use with this problem.)

Round your answer to two decimal places.

$

Compute the interest that will be paid for each of the first two periods. Indicate the amount of each payment that will be a reduction of principal.

Round your answers to two decimal places.

Period 1:
	Interest	$
	Reduction of principal	$
Period 2:
	Remaining principal balance	$
	Interest	$
	Reduction of principal	$