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Q: how much must your grandparents deposit today?
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A: Perpetuity is a form of annuity which pays out over an indefinite period of time.
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A:
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Your rich uncle has offered you two living trust payouts for the rest of your
life. The positive cash flows of each trust are shown below. If your personal
MARR is 10% per year, which trust should you select? Note: At 10% per year interest, infinity occurs when N = 80 years.
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- Grove Media plans to acquire production equipment for $845,000 that will be depreciated for tax purposes as follows: year 1, $329,000; year 2, $189,000; and in each of years 3 through 5, $109,000 per year. A 10 percent discount rate is appropriate for this asset, and the company's tax rate is 20 percent. Use Exhibit A.8 and Exhibit A.9. Required: a. Compute the present value of the tax shield resulting from depreciation. b. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($169,000 per year). Complete this question by entering your answers in the tabs below. Required A Required B Compute the present value of the tax shield resulting from depreciation. Note: Round PV factor to 3 decimal places. Present value of the tax shieldWhat amount of interest is capitalized on December 31, 2020? A. P1,200,000 B. P1,000,000 C. P600,000 D. P400,000Amount Amount RO RO Amount of life Insurance fund at the beginning of the year 765,281 Annuities 14,710 Claims by death 38,490 Bonus paid in cash 4,725 Claims by maturity 28,210 Bonus paid in reduction of Premium 1,250 Premiums 105,286 Surrenders 10,930 Expenses of management 9,945 Claims admitted but not paid at the end of year 40,017 Commission on reinsurance accepted 13,271 Annuities due but not paid 11,190 Consideration for annuities granted 5,310 Income tax paid on profits 1,530 Interest dividends and rent 26,230 Fines collected 46 Adjustments: (a) Claims covered under reinsurance RO 5,000 (b) Further claims initiated RO 4,000 (c) Further bonus utilized in reduction of premium RO 750 (d) Interest Accrued RO 7,700 (e) Premiums outstanding RO 3,700 From the above information Prepare Revenue Account and based on the prepared revenue account answer the following ‘6’ multiple choice…
- Exhibit A.9 Present Value of an Annuity of $1 Year 1/2% 1% 2% 4% 5% 6% 8% 10% 12% 14% 15% 16% 18% 20% 22% 24% 25% 30% 35% 40% 1 0.995 0.990 0.980 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.820 0.806 0.800 0.769 0.741 0.714 2 1.985 1.970 1.942 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.626 1.605 1.566 1.528 1.492 1.457 1.440 1.361 1.289 1.224 3 2.970 2.941 2.884 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.283 2.246 2.174 2.106 2.042 1.981 1.952 1.816 1.696 1.589 4 3.950 3.902 3.808 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.855 2.798 2.690 2.589 2.494 2.404 2.362 2.166 1.997 1.849 5 4.926 4.853 4.713 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.352 3.274 3.127 2.991 2.864 2.745 2.689 2.436 2.220 2.035 6 5.896 5.795 5.601 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.784 3.685 3.498 3.326 3.167 3.020 2.951 2.643 2.385 2.168 7 6.862 6.728 6.472 6.002 5.786 5.582 5.206 4.868 4.564 4.288 4.160 4.039 3.812 3.605 3.416 3.242 3.161 2.802 2.508 2.263…Items\Year EBIT FCInv WCInv Depreciation Interest Net Borrowing 2023 9.47 1.30 1.88 1.13 0.59 1.01 2024 14.44 1.54 2.62 1.54 0.82 1.32 2025 18.54 2.76 3.80 0.08 1.27 1.62 Terminal year (2026) 27.55 3.61 4.99 2 1.76 -0.94 Assume that tax rate is 0.3. Year 2026 is the terminal year. After 2026, the firm's FCFF will grow at 5% forever. Finally, assume that the firm's discount rate is 11%. What is the value of the equity holders? hint: you need to use FCFE instead of FCFF (assume that FCFE will grow at the same constant growth rate) FCFF = EBIT(1 - Tax rate) + Dep - FCInv - WCInv. FCFE=FCFF - Int(1 - Tax rate) + Net borrowing.Complete the table.. 1. IRA Fair Market Value $260,000 $546,000 $186,400 $418,680 $328,840 $284,348 Amount Withdrawn at Age 55 $50,000 $35,000 $10,000 $35,000 a. -0- a. $23,780 a. Penalty for Early Withdrawal $5,000 $3,500 a. Age Required Minimum 73 a. 72 a. 74 b. 80 b. 77 b. 71 b. Distribution Penalty If Not Withdrawn b. b. C. C C. C
- Use the following 8% interest factors 7 periods 8 periods 9 periods Select one: Present Value of Ordinary Annuity. a. $319,099 b. $267,687 C. $226,800 d. $172,398 5.2064 5.7466 6.2469 What will be the balance on September 1, 2029 in a fund which is accumulated by making $30,000 annual deposits each September 1 beginning in 2022, with the last deposit being made on September 1, 2027? The fund pays interest at 8% compounded annually. Future Value of Ordinary Annuity. 8.92280 10.63663 12.48756Case 2 – Building FundOn January 1, 2021, Grace Corp. created a special building fund by depositing a single sum of P300,000 with a Trust Company. The purpose of the fund is to provide resources to build another wing of a building that is expected to be completed by the end of 2025. The company estimates a total expenditure of P1.5 million and completion by January 1, 2026.Grace Corp. plans to make annual deposit from December 31, 2021 to 2025 to accumulate the required P1.5 million. The Trust Company will increase the fund each December 31 at an interest rate of 8%. Both the accounting period of the company and the fund end on December 31.Based on the above and the result of your audit, answer the following (Round off present and future value factors to four decimal places and final answer to the nearest peso):1. How much is the annual deposit to the fund?2. How much is the fund balance as of December 31, 2021Example 4 Commission received in cash during 2020 was $1 000. 31 Dec 2019 31 Dec 2020 24 2$ In arrears 100 50 In advance 200 80 Required: Prepare the commission income account for the year ended 31 December 2020.
- OV $50 1 0 $100 $150 2 3 1 2 Find A so they are equivalent if i = 2.5 %/year A $200 3 4 4 $250 5 years A = $103.90/year 5 yearsQUESTION 44 Contemplating retirement an individual wants to create a fund on an 5% basis allowing $24,000. annual withdraws for 20 years. How much must the balance of the fund equal to allow the $ 24,000. equal annual withdraws beginning one year hence? Following are appropriate factors from tables: Table % / n Present Value of annuity due $1 Present Value of ordinary annuity of $1 Present value of $1 Future Value of ordinary annuity of $1 5%/20 13.08532 12.46221 .37689 33.06595 $316,127.54 $320,975.78 $299,093.04 $314,047.68Question Content AreaSimon sold investment property 2 years ago for $750. Simon's basis in the property was $200. Simon is receiving $150 per year from the buyer. Simon reports this income on the installment method. If Simon collects $150 in principal during the current year, how much gain should he report from the sale for the year? a.$0 b.$110 c.$75 d.$90 e.None of these choices are correct.