Homework answers / question archive / 1

1

Finance

Share With

1. A savings plan requires 48 deposits of $553 per month commencing today. If the interest rate is 14.0% p.a compounding monthly, the value of the investment plan in exactly 4 years from today will be closest to:

a. $35725.32

b. $35313.33

c. $3102.39

d. $2721.39

2.Understand the importance of ethical behavior for management accountants.
Emily Henson, controller of an oil exploration division, has just been
approached by Tim Wilson, the divisional manager. Tim told Emily that the projected quarterly profits were unacceptable and that expenses need to be reduced. He suggested that a clean and easy way to reduce expenses is to assign the exploration and drilling costs of four dry holes to those of two successful holes. By doing so, the costs could be capitalized and not expensed, reducing the costs that need to be recognized for the quarter. He further argued that the treatment is reasonable because the exploration and drilling all occurred in the same field; thus, the unsuccessful efforts really were
the costs of identifying the successful holes. "Besides," he argued, "even if the treatment is wrong, it can be corrected in the annual financial statements.Next quarter's revenues will be more and can absorb any reversal without causing any severe damage to that quarter's profits. It's this quarter's profits that need some help."
Emily was uncomfortable with the request because generally accepted accounting principles do not sanction the type of accounting measures proposed by Tim.

3. you will receive $19,000 in 7 months and another $13,000 in 22 months. If the discount rate is 5% per annum (compounding monthly) for the first 10 months, and 10% per annum (compounding monthly) for the next 12 months, what single amount received today would be equal to the two proposed payments? (answer to the nearest whole dollar; don’t include the $ sign or commas)

4. You invest $3,000 and earn $596 over 22 months. What nominal rate of annual interest (compounding monthly) did you earn?

5. You owe your parents $27,000 (in present day dollars) and want to repay them in equal amounts the first to occur in 4 years from today and the other in 6 years from today. If the interest rate is 13.9% per annum compounding monthly, what will be the amount of each repayment?