Financial Accounting Homework

| June 22, 2015

Answer all 4 questions, they are just simple calculations?

1.

Maddy works at Burgers R Us. Her boss tells her that if she stays with the company for five years, she will receive a bonus of $5,400.

With an annual discount rate of 8%, calculate the presesnt value today of receiving $5,400 in five years?

2.

Calculate the present value of the following single amounts?

       Future Value    Annual Rate  Interest Compount   Period invested   Present Value

1      $9,200                  4%                  Anually                   3 years

2.       6,200                 10%             Semiannually             6 years

3.       5,200                  8%                 Quarterly                  2 years

3. Tatsuo has just been awarded a four-year scholarship to attend the university of his choice. The scholarship will pay $12,500 each year for the next four years to reimburse normal school-related expenditures. Each $12,500 payment will be made at the end of the year, contingent on Tatsuo maintaining good grades in his classes for that year. Assuming an annual interest rate of 6.0%, determine the value today of receiving this scholarship if Tatsuo maintains good grades?

Present Value of Annuity?

4. Calculate the present value of the following annuities, assuming each annuity payment is made at the end of each compounding period?


Annuity Payment Annual Rate Interest Compounded Period Invested Present Value of Annuity
1. $5,400 6.0% Quarterly 2 years
2. 10,400 8.0% Annually 5 years
3. 4,400 16.0% Semiannually 3 years

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