Question

Mike Derr Company expects to earn 6% per year on an investment that will pay $616,000 five years from now. (PV of $1, FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Compute the present value of this investment. Table Factor Present Value Future Value $ 616,000

Answer 1

1) Mike deer company:

Future value : $ 616,000

Table factor: PV factor for 6%, 5 years is 0.7473

Present value : $ 616,000* 0.7473 = $ 460,336.8

2)

Future value : $ 20,000

Table factor: PV factor for 3%, 6 years is 0.8375

Amount borrowed : $ 20,000* 0.8375 = $ 16,750

3) Tom Thompson

Future value : $ 30,940

present value : $11,000

Table factor = Future value/present value = 30,940/11,000 = 2.8127

years : At 12 years, 9% future value table factor is 2.8127

4) Bill padley

Future value : $ 29,400

present value : $ 24,000

Table factor = Future value/present value = 29,400/24,000 = 1.2250

Interest rate : At 3 years, 7% future value table factor is 1.2250

5)Mark welsch

present value : $7,900

Table factor: annual rate of 4% compounded quarterly for four years have table factor equal to 1% (4%/ no. of quarters) future value rate of 16 years (4 years * no. of quarters in a year) i.e., 1.1726

Total accumulation: $7,900*1.1726 = $ 9,263.54

6) Spiller Corp.

Table values are based on

n = 10 years * 2 ( semi annual) = 20

i = 10%/2 = 5%

Cash flow	table value	amount	present value
Present(maturity) value	0.3769	$400,000	$150,760
Interest(annuity)	12.462	$24,000	$299,088
Total cash proceeds			$ 449,848

Explanation:

Semi annual interest payment: $400,000*12%*(1/2) = $24,000

Principal repayment: present value table factor at 5%, 20th year is 0.3769

Interest payments: present value annuity factor at 5%, 20 years is 12.462

THNAK YOU