CASE AMOUNT OF ANNUITY INTEREST RATE DEPOSIT PERIOD (YR) A $2,500 8% 10YRS B 500 12 6 C 30,000 20 5 D 11,500 9 8 E 6,000 14 30 a. CALCULATE THE FUTURE VALUE OF THE ANNUITY ASSUMING THAT IT IS 1. An ordinary annuity 2. An annuity due b. Compare your findings in a(1)

A friend plans to buy a big-screen TV/entertainment system and can afford to set aside $1,320 toward the purchase today. If your friend can earn 5.0%, how much can your friend spend in four years on the purchase? Round off to the nearest $1. a. $1,444 b. $1,604 c. $1,764 d. $1,283

Northeast Company has 200,000 shares of common stock and 50,000 warrants outstanding. Each warrant entitles its owner to buy one share at a price of $20 before 2010. The firm’s basic earnings per share is $2.25. What is the firm’s diluted earnings per share? $1.15 $1.25 $1.50 $1.80 $2.00

If a firm’s earnings per share grew from $1 to over $2 over a 10-year period, the total growth would be 100 percent, but the annual growth rate would be less than 10 percent. True or False? Explain.

Do you think punishment for a crime should be a deterrent for future crimes? Would a more lenient punishment for a first time offender be a sufficient deterrent?

How can information on past transactions be used to predict future cash flows? What are the advantages and disadvantages of the single-step income statement?

Suppose that you begin the month with one penny. Each day, you earn as much as the total you possessed the day before (day 1 you have $0.01, day 2 you earn $0.01 and you now possess $0.02, day 3 you earn $0.02 and now possess $0.04, etc.). How much will you possess at the

Chapter 4: Problem 4.3 Use the future value interest factors in Appendix Table A-1 in each of the cases shown in the table on the facing page to estimate, to the nearest year, how long it would take an initial deposit, assuming no withdrawals, a. To double b. To quadruple. Case Interest Rate A 7%

Andrew Bogut just received a signing bonus of $1,000,000. His plan is to invest this payment in a fund that will earn 8%, compounded annually. A) If Bogut plans to establish the AB Foundation once the fund grows to $1,999,000, how many years until he can establish the foundation? B) Instead of investing the entire

Compute the future value of $1,000 compounded annually for a. 10 years at 5 percent b. 10 years at 7 percent c. 20 years at 5 percent d. Why is the interest earned in part (c) not twice the amount earned in part (a)

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