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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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