Chapter 4: Question (page 281)
You invest $3,000 for three years at 12 percent.
a. What is the value of your investment after one year?
Answer
The value of investment after one year is $3,360.
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You invest $3,000 for three years at 12 percent. b. What is the value of your investment after two years?
With inflation, what are the implications of using LIFO and FIFO inventory methods? How do they affect the cost of goods sold?
Question: Franklin Templeton has just invested \(9,260 for his son (age one). This money will be used for his son’s education 18 years from now. He calculates that he will need \)71,231 by the time the boy goes to school. What rate of return will Mr. Templeton need in order to achieve this goal?
Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract for $35,000 per year for the next 10 years. a. If Mr. Moore’s opportunity cost (potential return) is 10 percent, what is the present value of his consulting contract? b. Assuming Mr. Moore will not retire for two more years and will not start to receive his 10 payments until the end of the third year, what would be the value of his deferred annuity?
Question: Mrs. Crawford will receive $7,600 a year for the next 19 years from her trust. If a 14 percent interest rate is applied, what is the current value of the future payments?
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