MANAGERIAL ACCOUNTING HANDOUT PROBLEM 12 Score Name Section Problem (10 points). TIME VALUE OF MONEY PROBLEMS Use time value of money techniques to answer the following questions. Round all answers to the nearest whole dollar. (1) A company has surplus cash of $200,000 to invest. If the company can invest the cash for 4 years at 10% per year, how much will the company have at the end of 4 years if the interest is compounded: (a) Annually. (b) Semiannually. (c) Quarterly (2) A company needs $500,000 for plant expansion at the end of 20X9. Assume that the company can obtain a 12% annual return on its investment. What amount needs to be invested on January 1, 20X5 in order to reach this amount by December 31, 20X9? (3) An individual will retire on December 31, 20X5 after 33 years with her present employer at the age of 50. Over this time period, this individual's retirement account has grown to $400,000. At the date of retirement, she is expected to live another 28 years. She has spoken with the employee benefits officer at her company, who has given her the following options for the payout on her retirement (ignoring income tax considerations). (a) A one time lump sum payment on December 31, 20X5 in the amount of $400,000. (b) An annual payment of $40,000, guaranteed for 20 years, to begin on the day that she retires, with no other payments after the 20 years. If she dies before 20 years, the payments will revert to her estate. (c) An annual payment of $30,000 guaranteed for the rest of her life and beginning one year after her retirement. The payments will end upon her death. Which of the options is the best for her if the retirement account eams 10% per annum? Explain your