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Question(s) / Instruction(s):

     67.     Gorman Corporation makes an investment today (January 1, 2006). They will receive $20,000 every December 31st for the next six years (2006 – 2011). If Gorman wants to earn 12% on the investment, what is the most they should invest on January 1, 2006?
a.     $82,228.
b.     $92,096.
c.     $162,304.
d.     $181,780.

     68.     Renfro Corporation will receive $20,000 today (January 1, 2006), and also on each January 1st for the next five years (2007 – 2011). What is the present value of the six $20,000 receipts, assuming a 12% interest rate.?
a.     $82,228.
b.     $92,096.
c.     $162,304.
d.     $181,780.

     69.     Pedigo Corporation will invest $30,000 every December 31st for the next six years (2006 – 2011). If Pedigo will earn 12% on the investment, what amount will be in the investment fund on December 31, 2011?

a.     $123,342
b.     $138,144.
c.     $243,456.
d.     $272,670.

     70.     Wagner Corporation will invest $25,000 every January 1st for the next six years (2006 – 2011). If Wagner will earn 12% on the investment, what amount will be in the investment fund on December 31, 2011?
a.     $102,785.
b.     $115,120.
c.     $202,880.
d.     $227,225.

     71.     On January 1, 2007, Carly Company decided to begin accumulating a fund for asset replacement five years later. The company plans to make five annual deposits of $50,000 at 9% each January 1 beginning in 2007. What will be the balance in the fund, within $10, on January 1, 2012 (one year after the last deposit)? The following 9% interest factors may be used.
          Present Value of     Future Value of
          Ordinary Annuity     Ordinary Annuity
4 periods     3.2397     4.5731
5 periods     3.8897     5.9847
6 periods     4.4859     7.5233
a.     $326,166
b.     $299,235
c.     $272,500
d.     $250,000

Use the following 8% interest factors for questions 72 through 75.
          Present Value of     Future Value of
          Ordinary Annuity     Ordinary Annuity
7 periods     5.2064     8.92280
8 periods     5.7466     10.63663
9 periods     6.2469     12.48756

     72.     What will be the balance on September 1, 2013 in a fund which is accumulated by making $8,000 annual deposits each September 1 beginning in 2006, with the last deposit being made on September 1, 2013? The fund pays interest at 8% compounded annually.
a.     $85,093
b.     $71,383
c.     $60,480
d.     $45,973

     73.     If $5,000 is deposited annually starting on January 1, 2007 and it earns 8%, what will the balance be on December 31, 2014?
a.     $44,614
b.     $48,183
c.     $53,183
d.      $57,438

     74.     Henson Company wishes to accumulate $300,000 by May 1, 2015 by making 8 equal annual deposits beginning May 1, 2007 to a fund paying 8% interest compounded annually. What is the required amount of each deposit?
a.     $52,205
b.     $28,204
c.     $26,115
d.     $30,234

     75.     What amount should be recorded as the cost of a machine purchased December 31, 2006, which is to be financed by making 8 annual payments of $6,000 each beginning December 31, 2007? The applicable interest rate is 8%.
a.     $42,000
b.     $37,481
c.     $63,820
d.     $34,480

     76.     How much must be deposited on January 1, 2007 in a savings account paying 6% annually in order to make annual withdrawals of $20,000 at the end of the years 2007 and 2008? The present value of one at 6% for one period is .9434.
a.     $36,668
b.     $37,740
c.     $40,000
d.     $17,800

     77.     How much must be invested now to receive $10,000 for 15 years if the first $10,000 is received today and the rate is 9%?
          Present Value of
          Periods     Ordinary Annuity at 9%
14     7.78615
15     8.06069
16     8.31256
a.     $80,607
b.     $87,862
c.     $150,000
d.     $73,125

     78.     Foley Company financed the purchase of a machine by making payments of $18,000 at the end of each of five years. The appropriate rate of interest was 8%. The future value of one for five periods at 8% is 1.46933. The future value of an ordinary annuity for five periods at 8% is 5.8666. The present value of an ordinary annuity for five periods at 8% is 3.99271. What was the cost of the machine to Foley?
a.     $26,448
b.     $71,869
c.     $90,000
d.     $105,600

     79.     A machine is purchased by making payments of $5,000 at the beginning of each of the next five years. The interest rate was 10%. The future value of an ordinary annuity of 1 for five periods is 6.10510. The present value of an ordinary annuity of 1 for five periods is 3.79079. What was the cost of the machine?

a.     $33,578
b.     $30,526
c.     $20,849
d.     $18,954

     80.     Catt Co. has a machine that cost $200,000. It is to be leased for 20 years with rent received at the beginning of each year. Catt wants a return of 10%. Calculate the amount of the annual rent.
               Present Value of
          Period     Ordinary Annuity
19     8.36492
20     8.51356
21     8.64869
a.     $21,356
b.     $23,909
c.     $29,728
d.     $23,492

     81.     Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $21,000 for 15 years and to have a resale value of $40,000 at the end of that period. Assume a 10% rate and earnings at year end. The present value of 1 at 10% for 15 periods is .23939. The present value of an ordinary annuity at 10% for 15 periods is 7.60608. The future value of 1 at 10% for 15 periods is 4.17725.
a.     $159,728
b.     $169,303
c.     $185,276
d.     $324,576

     82.     On January 2, 2007, Yenn Corporation wishes to issue $2,000,000 (par value) of its 8%, 10-year bonds. The bonds pay interest annually on January 1. The current yield rate on such bonds is 10%. Using the interest factors below, compute the amount that Yenn will realize from the sale (issuance) of the bonds.
Present value of 1 at 8% for 10 periods     0.4632
Present value of 1 at 10% for 10 periods     0.3855
Present value of an ordinary annuity at 8% for 10 periods     6.7101
Present value of an ordinary annuity at 10% for 10 periods     6.1446
a.     $2,000,000
b.     $1,754,136
c.     $2,000,012
d.     $2,212,052

Note: Students must be given interest tables for question 83.

     83.     The market price of a $200,000, ten-year, 12% (pays interest semiannually) bond issue sold to yield an effective rate of 10% is
a.     $224,578.
b.     $224,925.
c.     $226,654.
d.     $374,472.


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