Qrb Week 4

Complete the following time value of money questions from the Accounting: What the Numbers Mean text

Ch. 6, problem P6.26; A, B, C, and D only

Present value calculations. Using a present value table, your calculator, or a computer program present value function, answer the following questions:

Required:

a. What is the present value of nine annual cash payments of $4,000, to be paid

at the end of each year using an interest rate of 6%?

4,000 x 6.8017= 27,206.80

multiplying the annuity amount by the annuity factor

b. What is the present value of $15,000 to be paid at the end of 20 years, using

an interest rate of 18%?

15,000 x 5.3527 = 80290.50

c. How much cash must be deposited in a savings account as a single amount

in order to accumulate $300,000 at the end of 12 years, assuming that the

account will earn 10% interest?

300,000 X 6.8137= 20,441.10

d. How much cash must be deposited in a savings account (as a single amount)

in order to accumulate $50,000 at the end of seven years, assuming that the

account will earn 12% interest?

50,000 x 4.5638 =2281.90

Complete the following time value of money question from the Quantitative Reasoning: Tools for Today’s Informed Citizen text:

Topic 6, Exploration 8b

Consider the formula P = 67.38 ・ (1.026)t. If we let P represent the population

of Mexico in year t where t is the number of years from 1980, confirm that

this formula gives the same population values as those given in the table in

Example 6.5.

year Popopulation in millionstion in Millions

1980 67.38

1981 69.13

1982 70.93

1983 72.77

1984 74.66

1985 76.60

1986 78.59

What would the population in 1990 have been if growth had continued in

this same pattern? (used excel)

1980 67.38

1981 69.13

1982 70.93

1983 72.77

1984 74.66

1985 76.6

1986 78.59

1987 80.337

1988 82.205

1989 84.073

1990 85.941

1990 = 85.941

Complete...