Answer each of the following independent questions in the space provided on page 11. Round all computations to the nearest dollar.
a) Company A deposited $15,000 in a savings account earning 6% on January 1, 2012. Determine the fund balance on December 31, 2016.
b) Company B needs to accumulate $45,000 by making five equal annual deposits. Assuming a 5% interest rate, how much must be deposited at the end of each year?
c) Company C has a new machine with an estimated life of six years and a $10,000 residual value. Assuming a 4% interest rate, what is the present value of the estimated residual value?
d) Company D owes $50,000 that is due on November 5, 2012. Unable to make the payment, D arranges to pay off the loan in five equal annual installments beginning November 5, 2013. Assuming the rate on the loan is 7%, calculate the annual payment.
e) Company E leases a Cadillac Escalade on June 1, 2012. The lease has a five year term, carries an interest rate of 8% and requires ten semiannual payments of $7500 beginning December 1, 2011. Calculate the selling price of the vehicle assuming no residual value.
i. How much interest will Company E pay over the life of the lease?
f) Company F has a pension obligation of $100,000 coming due in ten years. How much would the company have to invest at the end of each of the ten years to cover the obligation if the investment earns 3%?
g) Company G issued a $100,000, 4%, five-year bond on January 1, 2012 when the market rate of interest was 5%. Interest on the bond is paid semiannually beginning June 30, 2012. Determine the proceeds from the bond.
i. Determine interest expense for Company J for the year ending December 31, 2012.
ii. Determine interest paid by Company J during the year ending December 31, 2012.