1. Sonny Bono made an investment on August 1,
2011 which earned $9,000 one year later.
If the investments rate of return was 8%, how much did Sonny invest?
$112,500

2. Patricia inherited $25,000 and
invests this amount in an account that earns 4% interest per year compounded
quarterly. If her investment grows to
$31,742.50, how long was the money left in the account?
6
years

3.
Randy just borrowed $21,999.85 to purchase a brand new car. The contract calls for monthly payments of
$730.71 for three years. What is the
annual interest rate for Randys contract?
12%

4. Eddy Money
signed a three-year contract to host the Tonight Show. Although he will receive
$130 million dollars over three years, the terms of the contract are that he is
to receive $10 million at the end of each of the next three years plus an
additional $100 million at the end of the third year. Assuming an annual
interest rate of 10%, what is the actual value of Moneys contract in todays
dollars? (Hint: Think of the contact as
two separate calculations)
$99,999,000

5.
Bobbi Simpson is evaluating different investment plans. She has a choice
of investing $10,000 at either 5% simple interest or 5% compound interest that
is compounded annually. What will be the difference between the total amounts
of interest earned after two years?
$25,00

6. Amit is
currently 28 years old and plans on retiring at age 59. His plan is to begin
making annual withdrawals from his retirement account of $85,000 each year
beginning on his 59th birthday and continuing until age 82, the
average life span for a man Amits age. Which table should Amit use to
determine the total amount he needs to have saved up by the time he turns 59?
PV of an Annuity of $1

7. The Ramos family would like to go on anEuropean
vacation when their two children graduate from college in 5 years. They can deposit $12,500 in an investment
account today and they calculate that the vacation will cost a minimum of
$20,300 in 5 years. What is the minimum annual interest rate they must earn to
achieve their goal of $20,300 if the interest is compounded semi-annually?
10.0%

8. You landed a new Accounting job and decide
that you cant show up at your clients in an old clunker, so you start looking
for a new car to purchase. El Monte Slim, the car salesmen, tells you that he
can put you in a shiny new car for the low, low price of $618 per month for 3
years with a low interest rate of 12%. What is the price of the car?
$18,606

9. What is the present value of $10,000 received
twelve years from today, assuming an interest rate of 8% compounded
semiannually?
$ 3,901

10. Betty Maksitt is saving for a retirement log cabin in West
Virginia. She is going to make 20 annual deposits of $5,000 each into an
investment account beginning on July 1, 2012. Assuming an interest rate of 4%,
on July 1, 2042, (the end of 20 years) Bettys investment account will have the
following balance:
$148,891

For ACCT 2102 Homework
Problems: Chapter 11& 12

Present
Value of $1:

Interest rate

1%

4%

5%

8%

10%

12%

# of
periods

2

.9803

.9246

.9070

.8573

.8264

.7972

3

.9706

.8890

.8638

.7938

.7513

.7118

10

.9053

.6756

.6139

.4632

.3855

.3220

12

.8874

.6246

.5568

.3971

.3186

.2567

20

.8195

.4564

.3769

.2145

.1486

.1037

24

.7876

.3901

.3101

.1577

.1015

.0659

36

.6989

.2437

.1727

.0626

.0323

.0169

Future
Value of $1:

interest rate

1%

4%

5%

8%

10%

12%

# of
periods

2

1.0201

1.0816

1.1025

1.1664

1.2100

1.2544

3

1.0303

1.1249

1.1576

1.2597

1.3310

1.4049

10

1.1046

1.4802

1.6289

2.1589

2.5937

3.1058

12

1.1268

1.6010

1.7959

2.5182

3.1384

3.8960

20

1.2202

2.1911

2.6533

4.6610

6.7275

9.6463

24

1.2697

2.5633

3.2251

6.3412

9.8497

15.1786

36

1.4308

4.1039

5.7918

15.9682

30.9127

59.1356

Present
Value of an annuity of $1:

interest rate

1%

4%

5%

8%

10%

12%

# of
periods

2

1.9704

1.8861

1.8594

1.7833

1.7355

1.6901

3

2.9410

2.7751

2.7232

2.5771

2.4869

2.4018

10

9.4713

8.1109

7.7217

6.7101

6.1446

5.6502

12

11.2551

9.3851

8.8633

7.5361

6.8137

6.1944

20

18.0456

13.5903

12.4622

9.8181

8.5136

7.4694

24

21.2434

15.2470

13.7986

10.5288

8.9847

7.7843

36

30.1075

18.9083

16.5469

11.7172

9.6765

8.1924

Future
Value of an annuity of $1:

interest rate

1%

4%

5%

8%

10%

12%

# of
periods

2

2.0100

2.0400

2.0500

2.0800

2.100

2.1200

3

3.0301

3.1216

3.1525

3.2464

3.3100

3.3744

10

10.4622

12.0061

12.5779

14.4866

15.9374

17.5487

12

12.6825

15.0258

15.9171

18.9771

21.3843

24.1331

20

22.0190

29.7781

33.0660

45.7620

57.2750

72.0524

24

26.9735

39.0826

44.5020

66.7648

88.4973

118.1552

36

43.0769

77.5983

95.8363

187.1021

299.1268

484.4631

1. Sonny Bono made an investment on August 1,
2011 which earned $9,000 one year later.
If the investments rate of return was 8%, how much did Sonny invest?$112,5002. Patricia inherited $25,000 and
invests this amount in an account that earns 4% interest per year compounded
quarterly. If her investment grows to
$31,742.50, how long was the money left in the account?6
years3.
Randy just borrowed $21,999.85 to purchase a brand new car. The contract calls for monthly payments of
$730.71 for three years. What is the
annual interest rate for Randys contract?12%4. Eddy Money
signed a three-year contract to host the Tonight Show. Although he will receive
$130 million dollars over three years, the terms of the contract are that he is
to receive $10 million at the end of each of the next three years plus an
additional $100 million at the end of the third year. Assuming an annual
interest rate of 10%, what is the actual value of Moneys contract in todays
dollars? (Hint: Think of the contact as
two separate calculations)$99,999,0005.
Bobbi Simpson is evaluating different investment plans. She has a choice
of investing $10,000 at either 5% simple interest or 5% compound interest that
is compounded annually. What will be the difference between the total amounts
of interest earned after two years?
$25,006. Amit is
currently 28 years old and plans on retiring at age 59. His plan is to begin
making annual withdrawals from his retirement account of $85,000 each year
beginning on his 59th birthday and continuing until age 82, the
average life span for a man Amits age. Which table should Amit use to
determine the total amount he needs to have saved up by the time he turns 59? PV of an Annuity of $17. The Ramos family would like to go on anEuropean
vacation when their two children graduate from college in 5 years. They can deposit $12,500 in an investment
account today and they calculate that the vacation will cost a minimum of
$20,300 in 5 years. What is the minimum annual interest rate they must earn to
achieve their goal of $20,300 if the interest is compounded semi-annually?10.0%8. You landed a new Accounting job and decide
that you cant show up at your clients in an old clunker, so you start looking
for a new car to purchase. El Monte Slim, the car salesmen, tells you that he
can put you in a shiny new car for the low, low price of $618 per month for 3
years with a low interest rate of 12%. What is the price of the car? $18,6069. What is the present value of $10,000 received
twelve years from today, assuming an interest rate of 8% compounded
semiannually?
$ 3,901

10. Betty Maksitt is saving for a retirement log cabin in West
Virginia. She is going to make 20 annual deposits of $5,000 each into an
investment account beginning on July 1, 2012. Assuming an interest rate of 4%,
on July 1, 2042, (the end of 20 years) Bettys investment account will have the
following balance:
$148,891

For ACCT 2102 Homework
Problems: Chapter 11& 12Present
Value of $1:1%4%5%8%10%12%# of
periods2.9803.9246.9070.8573.8264.79723.9706.8890.8638.7938.7513.711810.9053.6756.6139.4632.3855.322012.8874.6246.5568.3971.3186.256720.8195.4564.3769.2145.1486.103724.7876.3901.3101.1577.1015.065936.6989.2437.1727.0626.0323.0169Future
Value of $1:1%4%5%8%10%12%# of
periods21.02011.08161.10251.16641.21001.254431.03031.12491.15761.25971.33101.4049101.10461.48021.62892.15892.59373.1058121.12681.60101.79592.51823.13843.8960201.22022.19112.65334.66106.72759.6463241.26972.56333.22516.34129.849715.1786361.43084.10395.791815.968230.912759.1356Present
Value of an annuity of $1:1%4%5%8%10%12%# of
periods21.97041.88611.85941.78331.73551.690132.94102.77512.72322.57712.48692.4018109.47138.11097.72176.71016.14465.65021211.25519.38518.86337.53616.81376.19442018.045613.590312.46229.81818.51367.46942421.243415.247013.798610.52888.98477.78433630.107518.908316.546911.71729.67658.1924Future
Value of an annuity of $1:1%4%5%8%10%12%# of
periods22.01002.04002.05002.08002.1002.120033.03013.12163.15253.24643.31003.37441010.462212.006112.577914.486615.937417.54871212.682515.025815.917118.977121.384324.13312022.019029.778133.066045.762057.275072.05242426.973539.082644.502066.764888.4973118.15523643.076977.598395.8363187.1021299.1268484.4631