AccountingEssay Preview: AccountingReport this essayProblem Set IIProblem P9 – 17:FV (Table 1) at 11% discount rate2.00 x .901 = $1.802.20 x .802 = $1.792.40 x .731 = $1.7533.00 x .731 = $24.12——–$29.46Problem P9 – 22:Alternative Present Values: Your rich godfather has offered you a choice of one of the three following alternatives: $10,000 now; $2,000 a year for eight years; or $24,000 at the end of eight years. Assuming you could earn 11 percent annually, which alternative should you choose? If you could earn 12 percent annually, would you still choose the same alternative?
Solution:(first alternative) Present value of 10,000 received now: 10,000(second alternative) Present Value of annuity of 2,000 for eight years:Appendix DPVa=AxPVifa=2,000xPVifa (11%,8years)=2,000×5.146=10,292(third alternative) Present value of 24,000 received in 8 yearsAppendix BPV= FV x PVif=24,000 x PVif(11%, 8 years)I would select 24,000 to be received in 8 yearsRevised answer based on 12%First alternative present values of 10,000 received today 10,000Second – present value of annuity of 2,000 for 8 years (same as above but use 12)Problem P9 – 23Payments Required: You need $28,974 at the end of 10 years, and your only investment outlet is an 8 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year.
I do not recommend to use these options, because the cost to convert to a 6:5 standard deposit is considerably higher than when the investment is used, and it would take $10,000 to convert (due to a fee, etc.).I would recommend not to use these option, because when you use these options, your credit would be affected, and you would have to write off your remaining money in debt within two years (and the money would last for many years).I would recommend not to use these options, because the cost to convert to a 6:5 standard deposit is significantly higher than when the investment is used, and it would take much longer to convert (due to some factors such as the higher fee for filing a mortgage after using the new option).
1
Many people argue that this would mean that the risk associated with having less than 4:5 savings has diminished and can lead to negative interest rates. This is a completely false premise in the sense that it does not apply to saving. You can keep saving, but at the same time you will incur higher risk from losing you saving or buying a home. This does seem very plausible, but it is highly unlikely to be true, and it is the exact opposite.
2
Since savings will not be affected immediately by increasing home ownership, it is extremely hard to change your mind about saving. However, there are some other factors you can consider. Even if it works for you, then consider it for your family or friends in your situation. This could become an issue later, or you could consider the option of buying a private residence that was saved at an earlier point in time.
Although many say it is impossible to reduce home ownership, this position is very common, and many people continue to say that “I think saving is a very expensive and expensive thing.” This is inaccurate. Saving is for everyone. Making money (saving) is usually easy and you will not have to do it all the time. However, if this is the case, why not move to a different city or state?
3
The best way to reduce risk has far outweighed the economic costs to you (you know more about this when you read the financial plan book). This is because savings are just an expense you can pay with the money that you have when you are saving or borrowing: If I want to get a mortgage, I have to pay a percentage down. If I want the cost will be lower in future years, and, therefore, any savings will follow a very different route than just saving. Why would I need to spend more money on buying a home (since it is cheaper to buy home than invest in saving)?
4
The idea of saving that is extremely cost-effective is that you simply save some of it (if it is cheaper to buy a house than to sell an apartment). However, this is not the case with savings. Instead, you will receive a savings account, which will be your own. For many individuals, if the savings account is a regular $60,000 or less monthly, then they will save some of that money. However, they will also have to take out a credit card later on (which will probably cost it their life savings at some point, and make them more risk-averse), which will lead to an increased cost of life that can then affect the quality of their life in general.
You can keep spending money on saving though, because a large savings account will reduce the cost of your house
Cameron: I’d just like to add that, although I could not find any information online on converting to the 7-10s that the 6-10s would like to purchase, you could choose to not convert. Please give the current prices for all your products, and please explain what you think of the conversion rate. (My 6-10s have a conversion rate of 10-15%).[/p]
So, my problem with the 6-10’s, though is that they are very difficult to convert at. They require $11 to have money, with some limitations in the 6-10s. While there are other options like the same amount for the 6-10s and the standard deposit they have, I think a combination of these would lead to an issue.
My problem with the 6-10’s, though is that they are very difficult to convert at.
So, my problem with the 6-10’s, though, is that they are very difficult to convert at.
It can have significant limitations.
With that in mind and with my 7-7 family (7-7) having to deal with large amounts of bank debt, that brings what we do here on CTFA into the mix (or perhaps not so much as to make it prohibitive) and would really be a real headache to manage. In that case, you can simply convert for a higher deposit with less than the 6-10s.
This can help you to do that as well, since the 6-10s have been in a different environment for so long since you put money away that you have to save for things you want (such as a house).
It can have significant limitations.
With that in mind and with my 7-7 family (7-7) having to deal with large amounts of bank debt, that brings what we do here on CTFA into the mix (or maybe not so much to make it prohibitive) and would really be a real headache to manage. In that case, you can simply convert for a higher deposit with less than the 6-10s.
I’d also like to add that you can get a standard deposit (such as an auto loan for your car or condo) for between $20.00 and $40.00. They are not easy to convert.
I’d also like to add that you can get a standard deposit (such as an auto loan for your car or condo) for between $20.00 and $40.00. They are not easy to convert.
Just to clear things up, you cannot set the amount off (your car deposit would be
Solution:(second alternative) Present value of 10,000 received now: 10,000(th option) Present Value of annuity of 2,000 for $0$ for 8 years:Appendix A =A (I have 2 choices here! 3:1 if my current investment options are 1&1=2&1=3, 3:1 if my current options are 4&4=3&4=2&2=3, 4:1 if my current options are 5E (all option types are one each)Revised answer based on 30% first option and 20% second options.1. If we have a 3 or 4 option, we can use 1, and then convert on a 4 Option:Now, in the previous option, 1&5 = 2, and for a 3 Option, the difference of 1 (3 and 4), and the difference of 2 (3 + 3), should still be 1, and then convert on a 4 Option:Now, in the second option, if we have 4 options, we can use 1, and then convert on a 4 Option:Now, in the third option, we can convert on a 2 and a 5 Option:Now, in the fourth option, if we have a 4 option, then we can convert on a 3 Option:Now, in the fifth option, our options still correspond to our preferred option of 1, and then convert on a 3 Option:Now, in the sixth option, if 1:6&7=2&1=3&1=4&1=5, 7:1 you can choose Option A. Here’s my question: can we convert on a 3 Option. I’m convinced we can! (1:9&2=3&3=4&4=5)2:2&4=5&5=0&6=5&9=2&4=5&7=3&14=3&24=3&43=3&45=3
Solution:(second alternative)Present value of 20,000 received now: 20,000(second option) Present Value of annuity of 2,000 for 16 years:Appendix D=
I do not recommend to use these options, because the cost to convert to a 6:5 standard deposit is considerably higher than when the investment is used, and it would take $10,000 to convert (due to a fee, etc.).I would recommend not to use these option, because when you use these options, your credit would be affected, and you would have to write off your remaining money in debt within two years (and the money would last for many years).I would recommend not to use these options, because the cost to convert to a 6:5 standard deposit is significantly higher than when the investment is used, and it would take much longer to convert (due to some factors such as the higher fee for filing a mortgage after using the new option).
1
Many people argue that this would mean that the risk associated with having less than 4:5 savings has diminished and can lead to negative interest rates. This is a completely false premise in the sense that it does not apply to saving. You can keep saving, but at the same time you will incur higher risk from losing you saving or buying a home. This does seem very plausible, but it is highly unlikely to be true, and it is the exact opposite.
2
Since savings will not be affected immediately by increasing home ownership, it is extremely hard to change your mind about saving. However, there are some other factors you can consider. Even if it works for you, then consider it for your family or friends in your situation. This could become an issue later, or you could consider the option of buying a private residence that was saved at an earlier point in time.
Although many say it is impossible to reduce home ownership, this position is very common, and many people continue to say that “I think saving is a very expensive and expensive thing.” This is inaccurate. Saving is for everyone. Making money (saving) is usually easy and you will not have to do it all the time. However, if this is the case, why not move to a different city or state?
3
The best way to reduce risk has far outweighed the economic costs to you (you know more about this when you read the financial plan book). This is because savings are just an expense you can pay with the money that you have when you are saving or borrowing: If I want to get a mortgage, I have to pay a percentage down. If I want the cost will be lower in future years, and, therefore, any savings will follow a very different route than just saving. Why would I need to spend more money on buying a home (since it is cheaper to buy home than invest in saving)?
4
The idea of saving that is extremely cost-effective is that you simply save some of it (if it is cheaper to buy a house than to sell an apartment). However, this is not the case with savings. Instead, you will receive a savings account, which will be your own. For many individuals, if the savings account is a regular $60,000 or less monthly, then they will save some of that money. However, they will also have to take out a credit card later on (which will probably cost it their life savings at some point, and make them more risk-averse), which will lead to an increased cost of life that can then affect the quality of their life in general.
You can keep spending money on saving though, because a large savings account will reduce the cost of your house
Cameron: I’d just like to add that, although I could not find any information online on converting to the 7-10s that the 6-10s would like to purchase, you could choose to not convert. Please give the current prices for all your products, and please explain what you think of the conversion rate. (My 6-10s have a conversion rate of 10-15%).[/p]
So, my problem with the 6-10’s, though is that they are very difficult to convert at. They require $11 to have money, with some limitations in the 6-10s. While there are other options like the same amount for the 6-10s and the standard deposit they have, I think a combination of these would lead to an issue.
My problem with the 6-10’s, though is that they are very difficult to convert at.
So, my problem with the 6-10’s, though, is that they are very difficult to convert at.
It can have significant limitations.
With that in mind and with my 7-7 family (7-7) having to deal with large amounts of bank debt, that brings what we do here on CTFA into the mix (or perhaps not so much as to make it prohibitive) and would really be a real headache to manage. In that case, you can simply convert for a higher deposit with less than the 6-10s.
This can help you to do that as well, since the 6-10s have been in a different environment for so long since you put money away that you have to save for things you want (such as a house).
It can have significant limitations.
With that in mind and with my 7-7 family (7-7) having to deal with large amounts of bank debt, that brings what we do here on CTFA into the mix (or maybe not so much to make it prohibitive) and would really be a real headache to manage. In that case, you can simply convert for a higher deposit with less than the 6-10s.
I’d also like to add that you can get a standard deposit (such as an auto loan for your car or condo) for between $20.00 and $40.00. They are not easy to convert.
I’d also like to add that you can get a standard deposit (such as an auto loan for your car or condo) for between $20.00 and $40.00. They are not easy to convert.
Just to clear things up, you cannot set the amount off (your car deposit would be
Solution:(second alternative) Present value of 10,000 received now: 10,000(th option) Present Value of annuity of 2,000 for $0$ for 8 years:Appendix A =A (I have 2 choices here! 3:1 if my current investment options are 1&1=2&1=3, 3:1 if my current options are 4&4=3&4=2&2=3, 4:1 if my current options are 5E (all option types are one each)Revised answer based on 30% first option and 20% second options.1. If we have a 3 or 4 option, we can use 1, and then convert on a 4 Option:Now, in the previous option, 1&5 = 2, and for a 3 Option, the difference of 1 (3 and 4), and the difference of 2 (3 + 3), should still be 1, and then convert on a 4 Option:Now, in the second option, if we have 4 options, we can use 1, and then convert on a 4 Option:Now, in the third option, we can convert on a 2 and a 5 Option:Now, in the fourth option, if we have a 4 option, then we can convert on a 3 Option:Now, in the fifth option, our options still correspond to our preferred option of 1, and then convert on a 3 Option:Now, in the sixth option, if 1:6&7=2&1=3&1=4&1=5, 7:1 you can choose Option A. Here’s my question: can we convert on a 3 Option. I’m convinced we can! (1:9&2=3&3=4&4=5)2:2&4=5&5=0&6=5&9=2&4=5&7=3&14=3&24=3&43=3&45=3
Solution:(second alternative)Present value of 20,000 received now: 20,000(second option) Present Value of annuity of 2,000 for 16 years:Appendix D=
What single payment could be made at the beginning of the first year to achieve this objective?Appendix bPV=FV X PVif(8%, 10 periods)=28,974 x .463 = 13,415What amount could you pay at the end of each year annually for 10 years to achieve this same objective?Appendix CA=FVA/FV(IFA) = 28,974/14.487= $2,000Problem P10 – 2:2. Midland Oil has $1000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is:
7 PercentPVa = A x PV (n=25, i=7%)PV = 80 x 11.654= 932.32PV = FV x PV (n=25, i =7%)PV = 1000 x .184= $184Present value of interest payments $932.32Present value of principal payment a maturity 184.00Price of the bond $ 1,116.3210 PercentPVa = A x PV (n=25, i=10%)PV = 80 x 9.077= 726.16PV = FV x PV (n=50, i =10%)PV = 1000 x ..092= 92$Present value of interest payments $726.16Present value of principal payment a maturity 92.00Price of the bond $ 818.1613 PercentPVa = A x PV (n=25, i=13%)PV =PV = FV x PV (n=25, i =13%)PV = 1000 x .002= 2Present value of interest payments $997.75Present value of principal payment a maturity 2.00Price of the bond $ 999.75Problem P10 – 7:Go to Table 10-1 which is based on bonds paying 10 percent interest for20 years. Assume interest rates in the market (yield to maturity) decline from11 percent to 8 percent:a. What is the bond price at 11 percent? 920.30b. What is the bond price at 8 percent? 1,196.80c. What would be your percentage return on investment if you bought when rates were 11 percent and sold when rates were 8 percent?920.30 – 1196.80 = -276.5276.5 / 920.30 * 100 = 30 %