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# Accounting Management Essay

324 words - 2 pages

Bonus Assignment
Managerial Accounting

Pages 427-428

1-10

1. a) FV= 7000(1+.12)^2=\$8,780.8
b) FV=7000(1+.12)^3=\$9,834.50
c) FV=7000(1+.12)^8=\$17,331.70

2. a) FV= 3000(1+.08)^10=\$6,476.77
b) FV= 3000(1+.08)^20=\$13,982.90
c) FV=3000(1+.08)^40=\$65,173.60

3. a) FVA= (1+.06)^5 – 1 x 1000 = \$5,637.09
.06
4. a) FVA= (1+.12)^30 – 1 x 4000 = \$965,331
.12
...view middle of the document...

20
(1+.06)^6

6. a) PVA= Payment * (1- [1/(1+r)^n])/r
PVA= \$8,000 * (1- [1/(1+.09)^5])/.09= \$31,117.21

7. Option 1 is to receive one off payment of \$15,000
Option 2 is to receive \$30,000 in 20 years. Assuming 8% compounded annually the \$30,000 NPV= 30,000 * 1_____
(1+.08)^20
NPV=\$6,436.45
Since Option 1 is a greater amount of \$15,000, Mr. Lewis should take the \$15,000 now.
8. PV of lump sum payment of \$30,000 =
1 _ * \$30,000= \$6,989.96
(1+.06)^25

PVA of \$1,000 every month for 25 years=
= 1000 * 1- ( __1____)
(1+.06)^25
.06
=\$12,783.35
Therefore, the maximum amount to invest to make it worthwhile is
\$6,989.96 + \$12,783.35= \$19,773.31

9. FVA of \$75,000 every year for the next 10 years at 6%
75,000 * (((1.06)^10)-1)
.06
=\$988,560
Gift to reach goal= \$1,000,000- \$988,560
=\$11,440

10. FVA of \$150,000 every year for the next 20 years at 7%
150,000 * (((1.07)^20)-1)
.07
=\$6,149,324

Amount to donate to charity = \$6,149,324- \$6,000,000
=\$149,324

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