ACCT 001 Chapter Notes - Chapter 1: Interest, Cash Flow

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pearjellyfish736

23 Dec 2020

School

College of The Sequoias

Department

Accounting (ACCT)

Course

ACCT 001

Professor

skaff

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Document Summary

How much a sum of money at interest (i) will grow into in some period of time. I: rate per period (not year) n: numbers of periods (not years) Slide 47-50 discusses how to use this formula. This formula assumes using compounding interest, slide 41-46 discusses differences between compounding interest and simple interest. Using calculator: be sure to set p/yr to be 1, input all available information (orders of inputs do not matter) Enter 20 (instead of 0. 07), then press i/yr ; After you enter all the inputs, press the key that you need to solve. Enter 2, then press fv ; c. screen shows 3. 8 . The unit is years, because it is compounding annually. Given pv, n, fv, solve for interest rates i. Pv = -1; fv=2; n=3; i/yr =: set p/yr to be 1 (compound annually), press i/yr , and the screen shows. A finite series of equal cash flow separated by equal time intervals.

Related Questions

The following situations should be considered independently. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

1. John Jamison wants to accumulate $68,205 for a down payment on a small business. He will invest $35,000 today in a bank account paying 10% interest compounded annually. Approximately how long will it take John to reach his goal?
2. The Jasmine Tea Company purchased merchandise from a supplier for $37,698. Payment was a noninterest-bearing note requiring Jasmine to make seven annual payments of $8,000 beginning one year from the date of purchase. What is the interest rate implicit in this agreement?
3. Sam Robinson borrowed $19,000 from a friend and promised to pay the loan in 10 equal annual installments beginning one year from the date of the loan. Samâs friend would like to be reimbursed for the time value of money at an 11% annual rate. What is the annual payment Sam must make to pay back his friend?

Required 1

Present Value:

Future Value

Required 2

Present Value:

Future Value

Required 3

table or calculator function

Present Value:

Annual Installment

skyalpaca142

On January 1, 2016, Glanville Company sold goods to OtterCorporation. Otter signed an installment note requiring payment of$15,000 annually for six years. The first payment was made onJanuary 1, 2016. The prevailing rate of interest for this type ofnote at date of issuance was 8%.

Glanville should record sales revenue in January 2016 of:

None of these answer choices is correct.

$90,000.

$74,891.

$69,343.

Yamaha Inc. hires a new chief financial officer and promises topay him a lump-sum bonus four years after he joins the company. Thenew CFO insists that the company invest an amount of money at thebeginning of each year in a 7% fixed rate investment fund to insurethe bonus will be available. To determine the amount that must beinvested each year, a computation must be made using the formulafor:

None of these answer choices is correct.

The future value of an annuity due.

The future value of a deferred annuity.

The future value of an ordinary annuity

Incognito Company is contemplating the purchase of a machinethat provides it with net after-tax cash savings of $92,000 peryear for five years. Interest is 10%. Assume the cash savings occurat the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1)

a)alculate the present value of the cash savings

purplemosquito873

to calculate present value of $1 chart 6-4 discount rate NOTANNUITY CHART

this is chart 6-5 to calculate present value of an ANNUITY of a1 discount rate

problem:

ACCT 001 Chapter Notes - Chapter 1: Interest, Cash Flow

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