Question

The following situations should be considered independently. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. John Jamison wants to accumulate $64,307 for a down payment on a small business. He will invest $30,000 today in a bank account paying 10% interest compounded annually. Approximately how long will it take John to reach his goal? 2. The Jasmine Tea Company purchased merchandise from a supplier for $33,494. Payment was a noninterest-bearing note requiring Jasmine to make seven annual payments of $6,000 beginning one year from the date of purchase. What is the interest rate implicit in this agreement? 3. Sam Robinson borrowed $15,000 from a friend and promised to pay the loan in 11 equal annual installments beginning one year from the date of the loan. Sam’s friend would like to be reimbursed for the time value of money at an 11% annual rate. What is the annual payment Sam must make to pay back his friend?

Answer 1

1. John Jamison Approximately how long will it take John to reach his goal?

8.

2. Jasmine Company What is the interest rate implicit in this agreement?

8,77%

3. Sam Robinson What is the annual payment Sam must make to pay back his friend?

2416,815107

Step-by-step explanation:

PV x Int Rate x+int.rate N y y*PV

1. John Jamison 30000 1 10% 110% 8 2,143 64307,6643 64307

2.Jasmine Company N Monthly principal interest Net value

33.494

1 6.000 3.062 2.937 30.432

2 6.000 3.331 2.669 27.101

3 6.000 3.623 2.377 23.477

4 6.000 3.941 2.059 19.536

5 6.000 4.287 1.713 15.250

6 6.000 4.662 1.337 10.587

7 6.000 5.071 929 5.516

8 6.000 5.516 484 0

Loan 33494

Monthly: 8

Interest: 8,77%

Monthly payment 6.000

3. Sam Robinson N Monthly principal interest Net value

15000

1 2416,815107 766,815107 1650 14233,18489

2 2416,815107 851,1647687 1565,650338 13382,02012

3 2416,815107 944,7928933 1472,022214 12437,22723

4 2416,815107 1048,720112 1368,094995 11388,50712

5 2416,815107 1164,079324 1252,735783 10224,4278

6 2416,815107 1292,128049 1124,687058 8932,299746

7 2416,815107 1434,262135 982,5529721 7498,037611

8 2416,815107 1592,03097 824,7841372 5906,006641

9 2416,815107 1767,154376 649,6607306 4138,852265

10 2416,815107 1961,541358 455,2737492 2177,310907

11 2416,815107 2177,310907 239,5041998 0