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Chapter 6 - Excel Solutions
Chapter 6 - Excel Solutions
Class: McGraw-Hill/Irwin
Problem 06-05
CLAUSSEN PURCHASE
Estimated Cash Flows
CLAUSSEN PURCHASE
Part 1:
JOHN JAMISON
30,000 = 0.5 *
PV of $1 factor =
60,000
$28,700 = 4.10000 *
Annuity factor =
$7,000
Present value of an ordinary annuity of $1: n=5, i=? (from Table 4, i = approximately 7 %)
Correct!
Part 3:
SAM ROBINSON
Part 1:
JOHN JAMISON
Part 2:
JASMINE TEA COMPANY
Amount paid for merchandise $ 28,700
Required annual payments $ 7,000
Number of payments required 5
Part 3:
SAM ROBINSON
Amount borrowed $ 10,000
Number of installments 10
Annual rate 9%
Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 06-07
LOWLIFE COMPANY
Requirement 1:
Date of *Deferred PV of
Annual First Time Interest Annuity Pension
Employee Payment Payment Periods Rate Factor Obligations
Tinkers $ 20,000 12/31/2014 17 2 11% 5.83627 $ 116,725 «- Correct!
Evers $ 25,000 12/31/2015 18 3 11% 5.25791 $ 131,448 «- Correct!
Chance $ 30,000 12/31/2016 19 4 11% 4.73684 $ 142,105 «- Correct!
Pension Obligations as of
December 31, 2014
Requirement 2:
PV *FV FV
as of Time Interest Annuity as of
Employee 12/31/2011 Period Rate Factor 12/31/2014
Tinkers $ 116,725 3 11% 1.36763 $ 159,637 «- Correct!
Evers $ 131,448 3 11% 1.36763 $ 179,772 «- Correct!
Chance $ 142,105 3 11% 1.36763 $ 194,347 «- Correct!
Total present value $ 533,756 «- Correct!
Date of
Annual First
Employee Payment Payment
Tinkers $ 20,000 12/31/2016
Evers $ 25,000 12/31/2017
Chance $ 30,000 12/31/2018