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Chapter 4: Q3BP-a (page 281)
a. What is the present value of $140,000 to be received after 30 years with a 14 percent discount rate?
The present value is $2,747.78.
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Question: Franklin Templeton has just invested \(9,260 for his son (age one). This money will be used for his son鈥檚 education 18 years from now. He calculates that he will need \)71,231 by the time the boy goes to school. What rate of return will Mr. Templeton need in order to achieve this goal?
Question: You will receive \(6,800 three years from now. The discount rate is 10 percent. d. Use the formula PV 5 FV 3 _____ 1 (1 1 i) n to find the present value of \)6,600 received three years from now at 10 percent interest.
Del Monty will receive the following payments at the end of the next three years: \(2,000, \)3,500, and \(4,500. Then from the end of the 4th year through the end of the 10th year, he will receive an annuity of \)5,000 per year. At a discount rate of 9 percent, what is the present value of all three future benefits?
Carrie Tune will receive \(19,500 for the next 20 years as a payment for a new song she has written. If a 10 percent rate is applied, should she be willing to sell out her future rights now for \)160,000?
With inflation, what are the implications of using LIFO and FIFO inventory methods? How do they affect the cost of goods sold?
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