Category: Uncategorized

Trimeton Corporation announced that in the year ended June 30, 2008, its earnings before taxes amounted to $2,367,045. Calculate its taxes using the following table. Round your final answer to the nearest dollar.   Tax Rate Taxable Income 15% $0 to $50,000 25 50,001 – 75,000 34 75,001 – 100,000 39 100,001 – 335,000 34 335,001 – 10,000,000 35 10,000,001 – 15,000,000 38 15,000,001 – 18,333,333 35  More than $18,333,333

Choose the CORRECT statement from the list.

A rookie quarterback is in the process of negotiating his first contract. The team’s general manager has offered him three possible contracts. Each of the contracts lasts for four years. All of the money is guaranteed and is paid at the end of each year. The payment terms of the contracts are listed below. Which of the three contracts is the best choice? The relevant interest rate is 5%. 

You want to go to Europe 5 years from now, and you can save $[pmt] every year. You will make your first deposit one year from today. You plan to deposit the funds in a mutual fund that you think will achieve a return of [r]% per year. Under these conditions, how much will you have in your Europe-trip savings account by the end of the 5 years?   **Round your answer to the nearest three decimals if needed. Do not type the $ symbol.

Your aunt is 70 years old and she has $[pv] saved for her retirement. She expects to live for another 30 years and she receives a [r]% rate (APR) from Retirement-Bank. How much should she withdraw at the end of each of the next 30 years, so that she ends up with zero in the account (she uses all of her savings by the end of those 30 years)? Hint: Think about it. This is just an ordinary annuity. The same kind of annuity we have been working on in class. You already know that the future value (FV) is zero (expected value at the end of the stream of cash flows) and you know that the present value (PV) is $[pv]. The number of years (N) is 30. You should find the “Payment” (Yearly Savings). **Round your answer to the nearest three decimals if needed. Do not type the $ symbol.

A lottery winner was given a perpetual annual payment of $20,000. She could invest the cash flows at 5 percent. What is the present value of this perpetuity? (Round to the nearest dollar.)

Suppose you make [t] annual deposits of $[pmt] in a savings account paying [r]% compounded annually. The deposits are made at the beginning of each year. How much will you have in your account by the end of Year [t]?   **Round your answer to the nearest three decimals if needed. Do not type the $ symbol.

The going concern assumption states that a business will be shutting down its operation in the near future.

Your girlfriend just won the Florida lottery. She has the choice of $15,900,000 today or a [t]-year annuity of $1,050,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.   Think about it. Given that she can choose between these two options, we can assume that the price (present value) of the 20-year annuity is $15,900,000 (hence, this is the PV), 20 is the number of years (N), $1,050,000 is the yearly payment and there is no future value (it is zero). **Round your answer to the nearest three decimals if needed. Do not type the % symbol. Type your solution as a percentage and not as a decimal (i.e. 4.2 and not 0.042). 

Which of the following statements about annuities is CORRECT?