Accounting 311 Intermediate Accounting I Spring 2024 Time Value of Money Assignment Solve each of these...

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Accounting 311 Intermediate Accounting I Spring 2024 Time Value of Money Assignment Solve each of these independent scenarios. You need to use Excel to solve these. Please submit on an Excel spreadsheet with your work identified through the use of formulas. #1 Carey Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Carey wishes to sell the land now. It has located two potential buyers: Buyer A, who is willing to pay $575,000 for the land now, and Buyer B, who is willing to make 20 annual payments of $90,000 each, with the first payment to be made 5 years from today. Assuming that the appropriate rate of interest is 9%, to whom should Carey sell the land? I #2 On January 1, 2024 Lance Co. issued five-year bonds with a face value of $700,000 and a stated interest rate of 12% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%. Calculate the cash proceeds from issuing the bonds. #3 Bob Smith borrowed $800,000 on Jan 1, 2022. This amount, plus accrued interest at 12% compounded semiannually, is to be repaid in one payment on Jan 1, 2032. To retire this debt, Bob plans to make 5 equal payments annually to a sinking fund starting on Jan 1, 2027. The fund is expected to earn 10%, compounded annually. How large must these payments be to completely retire the debt when due? #4 Jill Jones is excited about the birth of her first grandchild. She wants to provide money for college later on, but doesn't know how many years she will be able to make payments into a fund. She decides to put in a lump sum of money now which she wants to be equal to $50,000 in 18 years. If the savings instrument she invests in earns 6% compounded annually (at the end of each period), how much does she need to invest today to meet the commitment? How much would be needed if the compounding changed to quarterly?, monthly?, weekly?, daily? #5 John and Carol were so happy when they bought their house 2 years ago. They got a mortgage for $250,000 at 4.5% interest with monthly payments (at the end of each month) of $1,266.72 for 30 years (360 months). They were approached the other day by a financial planner who told them they could save a lot of interest on their loan and pay it off faster if they increased their monthly payment by a small amount. He suggested increasing the payment by $100 per month. Each remaining payment would be $1,366.72. Right now they have made payments for exactly 2 years (24 months), and could implement this plan without refinancing costs right away. During which month would the final payment now be made (round up)? How much interest over the life-time of the loan would John and Carol save with this plan? Repeat these calculations assuming an extra $200 per month (payment of $1,466.72). Accounting 311 Intermediate Accounting I Spring 2024 Time Value of Money Assignment Solve each of these independent scenarios. You need to use Excel to solve these. Please submit on an Excel spreadsheet with your work identified through the use of formulas. #1 Carey Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Carey wishes to sell the land now. It has located two potential buyers: Buyer A, who is willing to pay $575,000 for the land now, and Buyer B, who is willing to make 20 annual payments of $90,000 each, with the first payment to be made 5 years from today. Assuming that the appropriate rate of interest is 9%, to whom should Carey sell the land? I #2 On January 1, 2024 Lance Co. issued five-year bonds with a face value of $700,000 and a stated interest rate of 12% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%. Calculate the cash proceeds from issuing the bonds. #3 Bob Smith borrowed $800,000 on Jan 1, 2022. This amount, plus accrued interest at 12% compounded semiannually, is to be repaid in one payment on Jan 1, 2032. To retire this debt, Bob plans to make 5 equal payments annually to a sinking fund starting on Jan 1, 2027. The fund is expected to earn 10%, compounded annually. How large must these payments be to completely retire the debt when due? #4 Jill Jones is excited about the birth of her first grandchild. She wants to provide money for college later on, but doesn't know how many years she will be able to make payments into a fund. She decides to put in a lump sum of money now which she wants to be equal to $50,000 in 18 years. If the savings instrument she invests in earns 6% compounded annually (at the end of each period), how much does she need to invest today to meet the commitment? How much would be needed if the compounding changed to quarterly?, monthly?, weekly?, daily? #5 John and Carol were so happy when they bought their house 2 years ago. They got a mortgage for $250,000 at 4.5% interest with monthly payments (at the end of each month) of $1,266.72 for 30 years (360 months). They were approached the other day by a financial planner who told them they could save a lot of interest on their loan and pay it off faster if they increased their monthly payment by a small amount. He suggested increasing the payment by $100 per month. Each remaining payment would be $1,366.72. Right now they have made payments for exactly 2 years (24 months), and could implement this plan without refinancing costs right away. During which month would the final payment now be made (round up)? How much interest over the life-time of the loan would John and Carol save with this plan? Repeat these calculations assuming an extra $200 per month (payment of $1,466.72).