1. At the end of two years, what will be the balance in a savings account paying 6%
annually if $20,000 is deposited today? The future value of one at 6% for one
period is 1.06.
a. $20,000
b. $21,200
c. $22,400
d.
...
1. At the end of two years, what will be the balance in a savings account paying 6%
annually if $20,000 is deposited today? The future value of one at 6% for one
period is 1.06.
a. $20,000
b. $21,200
c. $22,400
d. $22,472
20,000*1.12360=22,472
2. Henson Company wishes to accumulate $500,000 by May 1, 2012 by making 8
equal annual deposits beginning May 1, 2004 to a fund paying 8% interest
compounded annually. What is the required amount of each deposit?
a. $87,008
b. $47,007
c. $43,525
d. $50,390
500,000/10.63663=47,007
3. What amount should be recorded as the cost of a machine purchased December
31, 2003, which is to be financed by making 8 annual payments of $8,000 each
beginning December 31, 2004? The applicable interest rate is 8%.
a. $56,000
b. $49,975
c. $85,093
d. $45,973
8,000*5.74664=45,973
4. Dyer Co. has a machine that cost $600,000. It is to be leased for 20 years with
rent received at the beginning of each year. Dyer wants a return of 10%.
Calculate the amount of the annual rent.
a. $64,069
b. $71,728
c. $89,184
d. $70,476
600,000/9.36492=64,0695. Find the present value of an investment in plant and equipment if it is expected to
provide annual earnings of $63,000 for 15 years and to have a resale value of
$120,000 at the end of that period. Assume a 10% rate and earnings are
received at year end.
a. $479,184
b. $507,910
c. $555,828
d. $973,728
63,000 * 7.60608=479,183
120,000 * .23939= 28,727
473,183+28,727=507,910
6. Before year-end adjusting entries, Bass Company's account balances at
December 31, 2004, for accounts receivable and the related allowance for
uncollectible accounts were $700,000 and $45,000, respectively. An aging of
accounts receivable indicated that $62,500 of the December 31 receivables are
expected to be uncollectible. The net realizable value of accounts receivable
after adjustment is
a. $682,500.
b. $637,500.
c. $592,500.
d. $655,000.
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