Answer Each of the Independent Problems (Show Computations)

question 103

Essay

Answer each of the independent problems (show computations):
A. Company A deposited $20,000 in a savings account on January 1, 2013, that will accumulate 6% interest each December 31.
1. What will be the savings balance as of December 31, 2017?
2. How much interest will be earned as of December 31, 2017?
B. Company B needs to accumulate a $50,000 fund by making five equal annual deposits. Assuming a 7% interest accumulation, how much must be deposited at the end of each year?
C. Company C has a new machine that has an estimated life of five years and a $5,000 residual value at the end of that life. Assuming an 8% interest rate, what is the present value of the estimated residual value?
D. Company D owes a $50,000 debt that is now due (January 1, 2015). Arrangements have been made to pay it off in five equal annual installments starting December 31, 2015 (an ordinary annuity situation).

Recognize the importance of safe sex practices and the effectiveness of different contraception methods.

Understand the relationship between the supply of money, its value, and the price level.

Comprehend the effects of inflation on an economy and differentiate between high and moderate inflation.

Identify and explain the costs associated with high inflation.

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Definitions:

Universal Life Insurance

A flexible type of permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance), which is invested to provide a cash value buildup.

Term Life Insurance

An insurance policy that provides coverage at a fixed rate of payments for a limited period of time, after which coverage expires without accumulating cash value.

Whole Life Insurance

A type of permanent life insurance policy that provides coverage for the insured's entire life, typically including a savings component.

Premiums

Payments made for insurance coverage, representing the cost of the insurance policy to the holder, typically made on a regular basis.