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What is the present value of the estimated residual value

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The following table values are provided to solve the following independent problems. All table values are for n=5 that is 5 periods.

Value                                           6%                  7%                  8%

Future value of                              $11.338         21.402         61.4693

Present value of                            $1.747        3.713             0.6806

Future value of annuity of           $15.637        15.750             75.8666

Present value of annuity of    $14.212           44.100         23.9927

Question 1: Company A deposited $20,000 in a savings account on January 1, 2019 that will accumulate 6% interest yearly. i) What will be the fund balance at the end of Year 5 ii) How much total interest will be earned by the deposit in 5 years ?

Question 2: Company B needs to accumulate a $50,000 fund by making five equal annual deposits. Assuming a 7% interest, how much must be deposited at the end of the year?

Question 3: Company C has new machine that has an estimated life of five years and a $5,000 residual value. Assuming an 8% interest rate, what is the present value of the estimated residual value?

Question 4: Company D owes a $50,000 debt. Arrangements have been made to pay it off in five equal annual installments, starting December 31, 2019. Assuming 8% interest, how much will the annual payment be?

Reference no: EM132554053

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