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21.doc-Accounting, 9e, Global Edition (Horngren) Chapter
Page 33
17) If Alice Godfried invests $14,000 today at a rate of 4% compounding yearly, what will the value of the
investment be in 8 years?
Future
Value of
$1
4%
5%
6%
7%
8%
9%
1
1.040
1.050
1.060
1.070
1.080
1.090
2
1.082
1.103
1.124
1.145
1.166
1.188
3
1.125
1.158
1.191
1.225
1.260
1.295
4
1.170
1.216
1.262
1.311
1.360
1.412
5
1.217
1.276
1.338
1.403
1.469
1.539
6
1.265
1.340
1.419
1.501
1.587
1.677
7
1.316
1.407
1.504
1.606
1.714
1.828
8
1.369
1.477
1.594
1.718
1.851
1.993
9
1.423
1.551
1.689
1.838
1.999
2.172
10
1.480
1.629
1.791
1.967
2.159
2.367
A) $18,311
B) $19,967
C) $19,166
D) $19,000
Answer:
C
Explanation:
C) Calculations:
1.369 × $14,000 = $19,166
Diff: 2
LO:
21-3
EOC Ref:
S21-8
AACSB:
Analytic Skills
AICPA Business:
Critical Thinking
AICPA Functional:
Measurement
33
Copyright © 2012 Pearson Education
Page 34
18) If Teddy Godfried invests $10,000 today in an account compounding yearly, and he wants his money to at least
double within 10 years, what interest rate is needed?
Future
Value of
$1
4%
5%
6%
7%
8%
9%
1
1.040
1.050
1.060
1.070
1.080
1.090
2
1.082
1.103
1.124
1.145
1.166
1.188
3
1.125
1.158
1.191
1.225
1.260
1.295
4
1.170
1.216
1.262
1.311
1.360
1.412
5
1.217
1.276
1.338
1.403
1.469
1.539
6
1.265
1.340
1.419
1.501
1.587
1.677
7
1.316
1.407
1.504
1.606
1.714
1.828
8
1.369
1.477
1.594
1.718
1.851
1.993
9
1.423
1.551
1.689
1.838
1.999
2.172
10
1.480
1.629
1.791
1.967
2.159
2.367
A) 5%
B) 6%
C) 7%
D) 8%
Answer:
D
Explanation:
D) Calculations:
2.159 × $10,000 = $21,590
Diff: 2
LO:
21-3
EOC Ref:
S21-8
AACSB:
Analytic Skills
AICPA Business:
Critical Thinking
AICPA Functional:
Measurement
34
Copyright © 2012 Pearson Education
Page 35
19) $23,000 invested today in an account with 5% interest compounding yearly will grow to what amount in 6
years?
Future
Value of
$1
4%
5%
6%
7%
8%
9%
1
1.040
1.050
1.060
1.070
1.080
1.090
2
1.082
1.103
1.124
1.145
1.166
1.188
3
1.125
1.158
1.191
1.225
1.260
1.295
4
1.170
1.216
1.262
1.311
1.360
1.412
5
1.217
1.276
1.338
1.403
1.469
1.539
6
1.265
1.340
1.419
1.501
1.587
1.677
7
1.316
1.407
1.504
1.606
1.714
1.828
8
1.369
1.477
1.594
1.718
1.851
1.993
9
1.423
1.551
1.689
1.838
1.999
2.172
10
1.480
1.629
1.791
1.967
2.159
2.367
A) $29,800
B) $22,490
C) $30,820
D) $32,637
Answer:
C
Explanation:
C) Calculations:
1.340 × $23,000 = $30,820
Diff: 2
LO:
21-3
EOC Ref:
S21-8
AACSB:
Analytic Skills
AICPA Business:
Critical Thinking
AICPA Functional:
Measurement
35
Copyright © 2012 Pearson Education
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