Assume that the minimum payment on a credit card is the greater of $27 or 3% of the unpaid balance. Find the minimum payment on an unpaid balance of $927.38.
> Refer to Problems 39 and 40. Suppose that Bob decides to continue to make $1,000 deposits into his IRA every year until his 65th birthday. If John still waits until he is 36 to start his IRA, how much must he deposit each year in order to have the same a
> Refer to Problem 39. John procrastinates and does not make his first $1,000 deposit into an IRA until he is 36, but then he continues to deposit $1,000 each year until he is 65 (30 deposits in all). If John’s IRA also earns 6.4% compounded annually, how
> Nine cards are numbered with the digits from 1 to 9. A 3-card hand is dealt, 1 card at a time. How many hands are possible in which? (A) Order is taken into consideration? (B) Order is not taken into consideration?
> If $500 is deposited each quarter into an account paying 8% compounded quarterly for 3 years, find the interest earned during each of the 3 years
> If $2,000 is deposited at the end of each quarter for 2 years into an ordinary annuity earning 7.9% compounded quarterly, construct a balance sheet showing the interest earned during each quarter and the balance at the end of each quarter.
> Parents have set up a sinking fund in order to have $120,000 in 15 years for their children’s college education. How much should be paid semiannually into an account paying 6.8% compounded semiannually?
> The Hartford offered an annuity that pays 5.5% compounded monthly. What equal monthly deposit should be made into this annuity in order to have $100,000 in 10 years?
> A self-employed person has a Keogh retirement plan. (This type of plan is free of taxes until money is withdrawn.) If deposits of $7,500 are made each year into an account paying 8% compounded annually, how much will be in the account after 20 years?
> USG Annuity and Life offered an annuity that pays 7.25% compounded monthly. If $1,000 is deposited into this annuity every month, how much is in the account after 15 years? How much of this is interest?
> Solve the future value formula (6) for i if n = 2.
> Explain why no interest is credited to an ordinary annuity at the end of the first period.
> Use the future value formula (6) to find each of the indicated values. FV = $4,100; PMT = $100; n = 20; i = ? (Round answer to two decimal places.)
> Use the future value formula (6) to find each of the indicated values. FV = $8,000; i = 0.04; PMT = 500; n = ?
> In a long-distance foot race, how many different finishes among the first 5 places are possible if 50 people are running? (Exclude ties).
> Use the future value formula (6) to find each of the indicated values. FV = $2,500; n = 10; i = 0.08; PMT = ?
> Use the future value formula (6) to find each of the indicated values. n = 25; i = 0.04; PMT = $100; FV = ?
> The buying and selling commission schedule shown in the table is from an online discount brokerage firm. Taking into consideration the buying and selling commissions in this schedule, find the annual compound rate of interest earned by each investment. A
> Find i (the rate per period) and n (the number of periods) for each annuity. Quarterly deposits of $1,200 are made for 18 years into an annuity that pays 7.6% compounded quarterly.
> The buying and selling commission schedule shown in the table is from an online discount brokerage firm. Taking into consideration the buying and selling commissions in this schedule, find the annual compound rate of interest earned by each investment. A
> Find i (the rate per period) and n (the number of periods) for each annuity. Semiannual deposits of $1,900 are made for 7 years into an annuity that pays 8.5% compounded semiannually.
> Refer to zero coupon bonds. A zero-coupon bond is a bond that is sold now at a discount and will pay its face value at some time in the future when it matures—no interest payments are made. If you pay $32,000 for a 5-year zero coupon bond with a face va
> Find i (the rate per period) and n (the number of periods) for each annuity. Annual deposits of $2,500 are made for 15 years into an annuity that pays 6.25% compounded annually
> Refer to zero coupon bonds. A zero-coupon bond is a bond that is sold now at a discount and will pay its face value at some time in the future when it matures—no interest payments are made. A zero-coupon bond with a face value of $20,000 matures in 10 y
> What annual nominal rate compounded continuously has the same annual percentage yield as 6% compounded monthly?
> A book club meets monthly at the home of one of its 10 members. In December, the club selects a host for each meeting of the next year
> A payday loan is a short-term loan that is repaid on the next payday, often by giving the lender electronic access to a personal checking account. Some states have statutes that regulate the fees that may be charged for payday loans. express the annual i
> What is the annual nominal rate compounded monthly for a bond that has an annual percentage yield of 2.95%?
> A payday loan is a short-term loan that is repaid on the next payday, often by giving the lender electronic access to a personal checking account. Some states have statutes that regulate the fees that may be charged for payday loans. express the annual i
> using graphical approximation techniques on a graphing calculator. One investment pays 9% simple interest and another pays 6% compounded monthly. Which investment would you choose? Why?
> Assume that the annual interest rate on a credit card is 19.99% and interest is calculated by the average daily balance method. The unpaid balance at the start of a 30-day billing cycle was $475.17. A purchase of $125.93 was made on day 3. No payment wa
> using graphical approximation techniques on a graphing calculator How long does it take for a $4,800 investment at 8% compounded monthly to be worth more than a $5,000 investment at 5% compounded monthly?
> Assume that the annual interest rate on a credit card is 19.99% and interest is calculated by the average daily balance method. The unpaid balance at the start of a 30-day billing cycle was $1,583.44. No purchases were made during the billing cycle and
> Show that the exact annual compound rate of growth of an investment that doubles in n years is given by r = 100 (21/n – 1) . Graph this equation and the rule of 72 on a graphing calculator for 5 ≤ n ≤ 20.
> Assume that the annual interest rate on a credit card is 25.74% and interest is calculated by the average daily balance method. The unpaid balance at the start of a 28-day billing cycle was $1,837.23. Purchases of $126.54 and $52.89 were made on days 21
> How long will it take money to triple if it is invested at 5% compounded daily? 6% compounded continuously?
> A student bought 4 books: 1 for his father, 1 for his mother, 1 for his younger sister, and 1 for his older brother.
> Assume that the annual interest rate on a credit card is 25.74% and interest is calculated by the average daily balance method. The unpaid balance at the start of a 28-day billing cycle was $955.13. A $50 payment was credited to the account on day 21 of
> If $1 had been placed in a bank account in the year 1066 and forgotten until now, how much would be in the account at the end of 2026 if the money earned 2% interest compounded annually? 2% simple interest? (Now you can see the power of compounding and w
> Many tax preparation firms offer their clients a refund anticipation loan (RAL). For a fee, the firm will give a client his refund when the return is filed. The loan is repaid when the IRS refund is sent to the firm. The RAL fee is equivalent to the inte
> A married couple has $15,000 toward the purchase of a house. For the house that the couple wants to buy, a down payment of $20,000 is required. How long will the money have to be invested at 7% compounded quarterly to grow to $20,000? (Round up to the ne
> Many tax preparation firms offer their clients a refund anticipation loan (RAL). For a fee, the firm will give a client his refund when the return is filed. The loan is repaid when the IRS refund is sent to the firm. The RAL fee is equivalent to the inte
> If you deposit $10,000 in a savings account now, what rate compounded continuously would be required for you to withdraw $12,500 at the end o
> Use the commission schedule from Company B shown in Table 3 to find the annual rate of interest earned by each investment. An investor purchases 75 shares at $37.90 a share, holds the stock for 150 days, and then sells the stock for $41.20 a share.
> (A) Starting with formula (1), derive each of the following formulas: (B) Explain why it is unnecessary to memorize the formulas above for P, i, and n if you know formula (1).
> Use the commission schedule from Company A shown in Table 2 to find the annual rate of interest earned by each investment. An investor purchases 450 shares at $21.40 a share, holds the stock for 26 weeks, and then sells the stock for $24.60 a share.
> In a suburb, housing costs have been increasing at 5.2% per year compounded annually for the past 8 years. A house worth $260,000 now would have had what value 8 years ago?
> The university president selected 2 of her vice-presidents to attend the dedication ceremony of a new branch campus.
> To complete the sale of a house, the seller accepts a 180-day note for $10,000 at 7% simple interest. (Both interest and principal are repaid at the end of 180 days.) Wishing to use the money sooner for the purchase of another house, the seller sells the
> If the inflation rate averages 4% per year compounded annually for the next 5 years, what will a car that costs $17,000 now cost 5 years from now?
> A person with $14,000 is trying to decide whether to purchase a car now, or to invest the money at 6.5% compounded semiannually and then buy a more expensive car. How much will be available for the purchase of a car at the end of 3 years?
> Assume that the minimum payment on a credit card is the greater of $20 or 2% of the unpaid balance. Find the minimum payment on an unpaid balance of $936.24.
> How long will it take money to double if it is invested at (A) 21% compounded continuously? (B) 33% compounded continuously?
> What is the purchase price of a 26-week T-bill with a maturity value of $1,000 that earns an annual interest rate of 4.903%?
> How long will it take money to double if it is invested at (A) 8% compounded semiannually?
> What annual interest rate is earned by a 33-day T-bill with a maturity value of $1,000 that sells for $996.16?
> Use compound interest formula (1) to find n to the nearest larger integer value A = 2P; i = 0.05; n = ?
> simplify each expression assuming that n is an integer and n ( 2.
> Evaluate the expression. If the answer is not an integer, round to four decimal places. (52 – 47)!
> Assume Down, Inc., was organized on May 1 to compete with Despair, Inc.—a company that sells de-motivational posters and office products. Down, Inc., encountered the following events during its first month of operations. a. Received $60,000 cash from the
> Rawlco Communications operates 15 radio stations. The following events occurred during September. a. Placed an order for office supplies costing $2,000. Supplier intends to deliver later in the month. b. Purchased equipment that cost $30,000; paid $10,
> Match each term with its related definition by entering the appropriate letter in the space provided. There should be only one definition per term (that is, there are more definitions than terms).
> Five individuals organized Miami Music Corporation on January 1. At the end of January 31, the following monthly financial data are available: No dividends were declared or paid during January. Required: 1. Complete the following income statement and
> Review the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each of the following independent cases to compute the two missing amounts for each case. Assume that it is the end of the first full year o
> Home Realty, Incorporated, has been operating for three years and is owned by three investors. J. Doe owns 60 percent of the total outstanding stock of 9,000 shares and is the managing executive in charge. On December 31, the following financial items fo
> Cinemark Holdings, Inc., operates movies and food concession counters throughout the United States. Its income statement for the quarter ended September 30, 2016, reported the following (accounts are listed alphabetically in thousands) Required: 1. Solv
> The following items relate to business transactions involving K·Swiss Inc. a. Coins and currency b. Amounts K·Swiss owes to suppliers of shoes c. Amounts K·Swiss can collect from customers d. Amounts owed to bank for loan to buy building e. Property
> Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $49,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2017. On that date, the followin
> Define accrual basis accounting and contrast it with cash basis accounting
> Complete the following table by computing the missing amounts (?) for the following independent cases.
> DSW, Inc., is a designer shoe warehouse, selling luxurious and fashionable shoes. Its balance sheet, at July 30, 2016 (the last Saturday of the month), contained the following (listed alphabetically, amounts in thousands) Prepare the balance sheet as of
> Using the following table and the equations underlying each of the four basic financial statements, show (a) that the balance sheet is in balance, (b) that net income is properly calculated, (c) what caused changes in the retained earnings account, and (
> Three individuals organized Pest Away Corporation on January 1 to provide insect extermination services. The company paid dividends of $10,000 during the year. At the end of the first year of operations, the following income statement was prepared: Requi
> Using the following table and the equations underlying each of the four basic financial statements, show (a) that the balance sheet is in balance, (b) that net income is properly calculated, (c) what caused changes in the retained earnings account, and (
> The Coca-Cola Company is one of the world’s leading manufacturers, marketers, and distributors of nonalcoholic beverage concentrates and syrups, producing more than 500 beverage brands. Mark each item in the following list with a letter to indicate wheth
> Tech Data Corporation is a leading distributor of computer peripherals and network solutions. The following items were taken from its recent cash flow statement. Mark each item in the following list with a letter to indicate whether it is a cash flow fro
> On March 10, 2018, Global Solutions, Inc., purchased 5,000 shares of Superior Technology’s 2,000,000 shares of stock for $50 per share. The following information pertains to the fair value of Superior Technology’s stoc
> On June 30, 2018, MetroMedia, Inc., purchased 10,000 shares of Mitek’s 900,000 outstanding shares of stock for $20 per share. The following information pertains to the fair value of Mitek stock: Required: Prepare the journal entries r
> Felicia Company acquired 21,000 of the 60,000 shares of outstanding common stock of Nueces Corporation as a long-term investment. The annual accounting period for both companies ends December 31. The following transactions occurred during the year: Requ
> Each of the following situations is independent. Required: Compute the missing amounts for (i) through (iv), rounded to the nearest dollar.
> Nutty Productions Inc. generated service revenue of $30,000 and income from operations of $10,000. The company estimates that, had it extended credit, it would have instead generated $60,000 of service revenue, but it would have incurred $25,000 of addit
> When accounting was developed in the 14th and 15th centuries, some businesses had very short lives. For instance, a business might have been created for a ship to sail from Europe to North America and return with furs and other goods. After the goods wer
> If you deposited $10,000 in a savings account that earns 10 percent, how much would you have at the end of 10 years? Use a convenient format to display your computations and round to the nearest dollar.
> Your company plans to issue bonds later in the upcoming year. But with the economic uncertainty and varied interest rates, it is not clear how much money the company will receive when the bonds are issued. The company is committed to issuing 2,000 bonds,
> You have the chance to purchase an oil well. Your best estimate is that the oil well’s net royalty income will average $25,000 per year for five years. There will be no residual value at that time. Assume that the cash inflow occurs at each year-end and
> On January 1, you plan to take a trip around the world upon graduation four years from now. Your grandmother wants to deposit sufficient funds for this trip in an investment account for you. On the basis of a budget, you estimate that the trip currently
> Use Excel to answer MC-1. Round to the nearest dollar. MC-1: Use present value tables to compute the present value of $500,000 to be paid in 10 years, with an interest rate of 8 percent. Round to the nearest dollar.
> You plan to retire in 20 years. Use the time value of money tables to calculate whether it is better for you to save $25,000 a year for the last 10 years before retirement or $15,000 for each of the 20 years. Assume you are able to earn 10 percent intere
> As a result of a slowdown in operations, Mercantile Stores is offering to employees who have been terminated a severance package of $100,000 cash, another $100,000 to be paid in one year, and an annuity of $30,000 to be paid each year for 20 years. Use p
> Use present value tables to compute the present value of $500,000 to be paid in 10 years, with an interest rate of 8 percent. Round to the nearest dollar
> Use present value tables to compute the present value of $500,000 to be paid in 10 years, with an interest rate of 8 percent. Round to the nearest dollar
> Complete the requirements for M7-7Â assuming weighted average cost is used in a periodic inventory system Data from M7-7: Given the following information, calculate cost of goods available for sale and ending inventory, then sales, cost of
> Academy Driving School reported the following amounts in its financial statements: Calculate EPS and ROE for Year 2. Another driving school in the same city reported a higher net income ($45,000), yet its EPS and ROE ratios were lower than those for the
> Refer to M11-11. Assume the preferred stock is noncumulative. What amount will go to preferred stockholders? How much of the cash dividends will be available for common stockholders? Data from M11-11: Colliers, Inc., has 100,000 shares of cumulative pr
> What are three limitations of the income statement that often lead to misconceptions?
> Colliers, Inc., has 100,000 shares of cumulative preferred stock outstanding. The preferred stock pays dividends in the amount of $2 per share, but because of cash flow problems, the company did not pay any dividends last year. The board of directors pla
> Complete the requirements of M11-9 assuming that the company announced a 2-for-1 stock split. Data from M11-9: Sturdy Stone Tools, Inc., announced a 100 percent stock dividend. Determine the impact (increase, decrease, no change) of this dividend on th
> Indicate whether each of the following relates to equity (E) or debt (D) financing and whether it makes that form of financing more, or less, favorable.
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. What is the amount of Acc
> Assume you were recently hired by Caffe D’Amore, the company that formulated the world’s first flavored instant cappuccino and now manufactures several lines of flavored cappuccino mixes. Given the companyâ€
> Problem Solved Company has been operating for five years as a software consulting firm. During this period, it has experienced rapid growth in Sales Revenue and in Accounts Receivable. To solve its growing receivables problem, the company hired you as it
