Question 1

You are little late planning your retirement, but are looking forward to retiring in 10 years. You expect to save $6,000 a year at an annual rate of 8%. How much will you have accumulated when you retire?

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Question 2

Jackson has a loan that requires a $17,000 lump sum payment at the end of four years. The interest rate on the loan is 5%, compounded annually. How much did Jackson borrow today?

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Question 3

A company is creating a fund today by depositing $65,763. The fund will grow to $90,000 after 8 years. What annual interest rate is the company earning on the fund?

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Question 4

A company has $46,000 today to invest in a fund that will earn 4% compounded annually. How much will the fund contain at the end of 6 years?

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Question 5

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in 7 years. The fund will earn 7% interest, and the company intends to put away a series of equal year-end amounts for 7 years. What is the amount of the annual deposits that the company must make?

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Question 6

A company is beginning a savings plan to purchase a new building. It will be saving $43,000 per year for the next 10 years. How much will the company have accumulated after the tenth year-end deposit, assuming the fund earns 9% interest?

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Question 7

When you reach retirement age, you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702. The fund will earn 6% per year. For how many years will you be able to draw an even amount of $14,702?

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Question 8

A company borrows money from the bank by promising to make 8 semiannual payments of $9,000 each. How much is the company able to borrow if the interest rate is 10% compounded semiannually?

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Question 9

A company is setting aside $21,354 today, and wishes to have $30,000 at the end of three years for a down payment on a piece of property. What interest rate must the company earn?

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Question 10

Protocol Company has acquired equipment from a dealer that requires equal payments of $12,000 at the end of each of the next five years. This transaction includes interest at 9%, compounded annually. What is the value of the machine today?

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Question 11

Garcia Brass Fixtures is planning on replacing one of its machines in five years by making aone-time deposit of $20,000 today and four yearly contributions of $5,000 beginning at the end of year 1. The deposits will earn 10% interest. How much money will Garcia have accumulated at the end of five years to replace the machine?

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Question 12

A company is beginning a savings plan. It will be saving $15,000 per year for the next 10 years. How much will the company have accumulated after the tenth year-end deposit, assuming the fund earns 10% interest?

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Question 13

A company borrows money from the bank by promising to make 6 annual year-end payments of $27,000 each. How much is the company able to borrow if the interest rate is 9%?

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Question 14

Mason Company has acquired a machine from a dealer that requires a payment of $45,000 at the end of five years. This transaction includes interest at 8%, compounded semiannually. What is the value of the machine today?

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Question 15

Trey has $105,000 now. He has a loan of $175,000 that he must pay at the end of 5 years. He can invest his $105,000 at 10% interest compounded semiannually. Will Trey have enough to pay his loan at the end of the 5 years?

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Question 16

City Peewee League borrowed $883,212, and must make annual year-end payments of $120,000 each. If City's interest rate is 6%, how many years will it take to pay off the loan?

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Question 17

Kelsey has a loan that requires a $25,000 lump sum payment at the end of three years. The interest rate on the loan is 5%, compounded annually. How much did Kelsey borrow today?

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Question 18

Giuliani Co. lends $524,210 to Craig Corporation. The terms of the loan require that Craig make six semiannual period-end payments of $100,000 each. What semiannual interest rate is Craig paying on the loan?

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Question 19

A company has $50,000 today to invest in a fund that will earn 7%. How much will the fund contain at the end of 8 years?

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Question 20

________ is a borrower's payment to the owner of an asset for its use.

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Quiz 26: Present and Future Values in Accounting