Reference no: EM131208040
Time Value of Money Concept
The following situations involve the application of the time value of money concept. Use the appropriate present or future value table that may be found by clicking on the Present & Future Values button. Use the full factor when calculating your results.
1. Janelle Carter deposited $9,830 in the bank on January 1, 1997, at an interest rate of 10% compounded annually. How much has accumulated in the account by January 1, 2014? Round to the nearest whole dollar. $
2. Mike Smith deposited $24,910 in the bank on January 1, 2004. On January 2, 2014, this deposit has accumulated to $58,971. Interest is compounded annually on the account. What rate of interest did Mike earn on the deposit? Round to the nearest whole percent. %
3. Lee Spony made a deposit in the bank on January 1, 2007. The bank pays interest at the rate of 8% compounded annually. On January 1, 2014, the deposit has accumulated to $12,590. How much money did Lee originally deposit on January1, 2007? Round to the nearest whole dollar. $
4. Nancy Holmes deposited $6,480 in the bank on January 1 a few years ago. The bank pays an interest rate of 12% compounded annually, and the deposit is now worth $25,246. How many years has the deposit been invested? Round to the nearest whole year. years
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Prevailing interest rate change the value of the bond
: A 10-year and a 1-year zero-bond both offer an interest rate of 8% per annum. How does an increase of 1 basis point in the prevailing interest rate change the value of the 10-year bond? What is the ratio of the value change over the interest change? ..
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Market rate of return to the investor
: On January 1, 2013, Learned, Inc., issued $2.6 million face amount of 10-year, 7% stated rate bonds when market interest rates were 1%. The bonds pay semiannual interest each June 30 and December 31. Calculate the proceeds (issue price) of Learned, I..
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The price of bond that offers safe promise
: The price of a bond that offers a safe promise of $100 in 1 year is $95. What is the implied interest rate? If the bond’s interest rate suddenly jumped up by 150 basis points, what would the bond price be? How much would an investor gain/lose if she ..
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Analysis of past warranty records indicates
: Bakem Enterprises manufactures and sells Ovens. Bakem provides all customers with a two-year warranty guaranteeing to repair, free of charge, any defects reported during this time period. Analysis of past warranty records indicates that 12% of all sa..
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Time value of money concept
: The following situations involve the application of the time value of money concept. Use the appropriate present or future value table that may be found by clicking on the Present & Future Values button. Janelle Carter deposited $9,830 in the bank on..
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Annual returns beginning one year from now
: Kelly Reading invests $6,815.79 now for a series of $1,400 annual returns beginning one year from now. Kelly will earn a return of 10% on the initial investment. Click here to view the factor table. (For calculation purposes, use 5 decimal places as ..
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The dividends are nonqualified
: Hayley recently invested $40,000 in a public utility stock paying a 8 percent annual dividend. What will her investment be worth in five years if the dividends are nonqualified?
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Plantwide factory overhead rate
: Pinacles budgeted $269920 of overhead for 2012. actual overhead ccosts for the year were $256030,000. Pinacle's plantwide allocation base, machine hours, was budgeted at $48700 hrs. Actual machine hours 40520 . A total of 90410 units was budgeted to ..
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What is the maximum price pendley should pay for equipment
: Pendley Company is considering purchasing equipment. The equipment will produce the following cash flows: Year 1, $40,500; Year 2, $42,100; and Year 3, $54,200. Pendley requires a minimum rate of return of 9%. What is the maximum price Pendley should..
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