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).

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