Assuming that the cost of money is the only factor

Assignment Help Financial Accounting

Reference no: EM131292681

Part (a) Compute the amount that a $20,000 investment today would accumulate at 9% (compound interest) by the end of 8 years.

Part (b) Giles wants to retire at the end of 2016. His life expectancy is 20 years from his retirement. Giles has come to you, his CPA, to learn how much he should deposit on December 31, 2016 to be able to withdraw $55,000 at the end of each year for the next 20 years, assuming the amount on deposit will earn 7% interest annually.

Part (c) Willow has $1,800 overdue debt at UC Sunnydale’s bookstore. She has only $600 in her checking account and doesn't want her parents to know about this debt. The bookstore tells her that she may settle the account in one of two ways since she can't pay it all now: 1. Pay $600 now and $1,600 when she completes her program, two years from today. 2. Pay $2,500 one year after completion of her program, three years from today. Assuming that the cost of money is the only factor in Willow's decision and that the cost of money to her is 8%, which alternative should she choose? Your answer must be supported with calculations.

Reference no: EM131292681

Questions Cloud

Explain the overall manner in which you would utilize doe : Analyze the overall manner in which you would utilize DOE to manage and improve the work process of the project in question. Provide a rationale for your response.

Ambition-to-action : Discuss way in which a management model such as Statoil´s "Ambition-To-Action" Could remedy the Myopia problem.

Benefits to domestic partners : Once you have chosen a side, research the issue to find facts to support your belief. Prepare a one page executive summary and a cover letter addressed to the Director of Human Resources

Argument that without rule of law : To what extent is the argument that without rule of law, democratic constitutions, a system of checks and balances in government or viable and functioning institutions, sound security sector governance is impossible?

Assuming that the cost of money is the only factor : Compute the amount that a $20,000 investment today would accumulate at 9% (compound interest) by the end of 8 years. Willow has $1,800 overdue debt at UC Sunnydale’s bookstore. She has only $600 in her checking account and doesn't want her parents to..

Discriminate between the major sub disciplines of toxicology : Compare and discriminate between the major sub disciplines of toxicology and their roles in occupational safety and health and illustrate the mechanisms by which a toxicant passes through the cell membrane routes of absorption ,the distribution pr..

What is the aqueous concentration at that temperature : If the air above a lagoon has ethylbenzene at a partial pressure of 0.1 kPa at 30?C in equilibrium with the water, what is the aqueous concentration at that temperature?

Trends current problems air trans : What do you think is the most important challenge to the industry? Is it a new challenge or one that has plagued the industry for decades? Support your response.

Write a memo of introduction : Send an e-mail or write a memo of introduction to your instructor. see chapter 5 for formats and tips on preparing e-mail messages.

User Account

All Pages