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Appendix E
Accounting and
the Time Value of Money
EXERCISES—SET A
EE-1A. Simple and Compound Interest
(LO1)
a. 1: $20,000 x 0.02 x 6 = $2,400
2: $20,000 x 0.04 x 4 = $3,200
3: $20,000 x 0.06 x 3 = $3,600
b. 1: $20,000 x 1.12616 = $22,523.20 - $20,000.00 = $2,523.20
2: $20,000 x 1.16986 = $23,397.20 - $20,000.00 = $3,397.20
3: $20,000 x 1.19102 = $23,820.40 - $20,000.00 = $3,820.40
EE-2A. Future Value Computation
(LO2)
$5,000 x 1.25971 = $6,298.55
EE-3A. Future Value Computation
(LO2)
$5,000 x 3.24640 = $16,232.00
EE-4A. Present Value Computation
(LO3)
$5,000 x 0.79383 = $3,969.15
© 2024
Solutions Manual, Appendix E E-1
,EE-5A. Present Value Computation
(LO3)
$5,000 x 2.57710 = $12,885.50
EE-6A. Future Value Computation
(LO2)
$10,000 x 1.26248 = $12,624.80
EE-7A. Present Value Computation
(LO3)
$10,000 x 0.79209 = $7,924.90
EE-8A. Future Value Computation
(LO2)
$10,000 x 9.54911 = $95,491.10
EE-9A. Future Value Computation
(LO2)
$10,000 x 9.21423 = $92,142.30
EE-10A. Present Value Computation
(LO3)
$150,000 x 0.78353 = $117,529.50
EE-11A. Future Value Computation
(LO2)
(a) $12,000 x 1.46933 =$17,631.96
(b) $12,000 x 1.48024 = $17,762.88
(c) $12,000 x 1.48595 = $17,831.40
© 2024
E-2 Financial & Managerial Accounting for Undergraduates, 3rd Edition
,EE-12A. Future Value Computation
(LO2)
(a) $5,000 x 1.36049 = $6,802.45
(b) $5,000 x 1.36857 = $6,842.85
(c) $5,000 x 1.37279 = $6,863.95
EE-13A. Present Value Computation
(LO3)
(a) $30,000 x 0.79383 = $23,814.90
(b) $30,000 x 0.79031 = $23,709.30
(c) $30,000 x 0.78849 = $23,654.70
EE-14A. Future Value Computation
(LO2)
$3,200 x 30.90565 = $98,898.08
Since this is greater than the required $90,000, it appears the plan will be successful.
EE-15A. Present Value Computation
(LO3)
1. $500,000
2. $540,000 x 0.92593 = $500,002.20
3. $50,000 x 9.81815 = $490,907.50
4. $45,000 x 11.25778 = $506,600.10
Option #4 is the best choice.
© 2024
Solutions Manual, Appendix E E-3
, EXERCISES—SET B
EE-1B. Simple and Compound Interest
(LO1)
a. 1: $6,000 x 0.08 x 8 = $3,840
2: $6,000 x 0.12 x 5 = $3,600
3: $6,000 x 0.04 x 2 = $ 480
b. 1: $6,000 x 1.85093 = $11,105.58 ‒ $6,000.00 = $5,105.58
2: $6,000 x 1.76234 = $10,574.04 – $6,000.00 = $4,574.04
3: $6,000 x 1.08160 = $6,489.60 – $6,000.00 = $489.60
EE-2B. Future Value Computation
(LO2)
$1,500 x 1.26248 = $1,893.72
EE-3B. Future Value Computation
(LO2)
$1,500 x 4.37462 = $6,561.93
EE-4B. Present Value Computation
(LO3)
$1,500 x 0.79209 = $1,188.14
EE-5B. Present Value Computation
(LO3)
$1,500 x 3.46511 = $5,197.67
EE-6B. Future Value Computation
(LO2)
$5,000 x 1.26532 = $6,326.60
© 2024
E-4 Financial & Managerial Accounting for Undergraduates, 3rd Edition
Appendix E
Accounting and
the Time Value of Money
EXERCISES—SET A
EE-1A. Simple and Compound Interest
(LO1)
a. 1: $20,000 x 0.02 x 6 = $2,400
2: $20,000 x 0.04 x 4 = $3,200
3: $20,000 x 0.06 x 3 = $3,600
b. 1: $20,000 x 1.12616 = $22,523.20 - $20,000.00 = $2,523.20
2: $20,000 x 1.16986 = $23,397.20 - $20,000.00 = $3,397.20
3: $20,000 x 1.19102 = $23,820.40 - $20,000.00 = $3,820.40
EE-2A. Future Value Computation
(LO2)
$5,000 x 1.25971 = $6,298.55
EE-3A. Future Value Computation
(LO2)
$5,000 x 3.24640 = $16,232.00
EE-4A. Present Value Computation
(LO3)
$5,000 x 0.79383 = $3,969.15
© 2024
Solutions Manual, Appendix E E-1
,EE-5A. Present Value Computation
(LO3)
$5,000 x 2.57710 = $12,885.50
EE-6A. Future Value Computation
(LO2)
$10,000 x 1.26248 = $12,624.80
EE-7A. Present Value Computation
(LO3)
$10,000 x 0.79209 = $7,924.90
EE-8A. Future Value Computation
(LO2)
$10,000 x 9.54911 = $95,491.10
EE-9A. Future Value Computation
(LO2)
$10,000 x 9.21423 = $92,142.30
EE-10A. Present Value Computation
(LO3)
$150,000 x 0.78353 = $117,529.50
EE-11A. Future Value Computation
(LO2)
(a) $12,000 x 1.46933 =$17,631.96
(b) $12,000 x 1.48024 = $17,762.88
(c) $12,000 x 1.48595 = $17,831.40
© 2024
E-2 Financial & Managerial Accounting for Undergraduates, 3rd Edition
,EE-12A. Future Value Computation
(LO2)
(a) $5,000 x 1.36049 = $6,802.45
(b) $5,000 x 1.36857 = $6,842.85
(c) $5,000 x 1.37279 = $6,863.95
EE-13A. Present Value Computation
(LO3)
(a) $30,000 x 0.79383 = $23,814.90
(b) $30,000 x 0.79031 = $23,709.30
(c) $30,000 x 0.78849 = $23,654.70
EE-14A. Future Value Computation
(LO2)
$3,200 x 30.90565 = $98,898.08
Since this is greater than the required $90,000, it appears the plan will be successful.
EE-15A. Present Value Computation
(LO3)
1. $500,000
2. $540,000 x 0.92593 = $500,002.20
3. $50,000 x 9.81815 = $490,907.50
4. $45,000 x 11.25778 = $506,600.10
Option #4 is the best choice.
© 2024
Solutions Manual, Appendix E E-3
, EXERCISES—SET B
EE-1B. Simple and Compound Interest
(LO1)
a. 1: $6,000 x 0.08 x 8 = $3,840
2: $6,000 x 0.12 x 5 = $3,600
3: $6,000 x 0.04 x 2 = $ 480
b. 1: $6,000 x 1.85093 = $11,105.58 ‒ $6,000.00 = $5,105.58
2: $6,000 x 1.76234 = $10,574.04 – $6,000.00 = $4,574.04
3: $6,000 x 1.08160 = $6,489.60 – $6,000.00 = $489.60
EE-2B. Future Value Computation
(LO2)
$1,500 x 1.26248 = $1,893.72
EE-3B. Future Value Computation
(LO2)
$1,500 x 4.37462 = $6,561.93
EE-4B. Present Value Computation
(LO3)
$1,500 x 0.79209 = $1,188.14
EE-5B. Present Value Computation
(LO3)
$1,500 x 3.46511 = $5,197.67
EE-6B. Future Value Computation
(LO2)
$5,000 x 1.26532 = $6,326.60
© 2024
E-4 Financial & Managerial Accounting for Undergraduates, 3rd Edition
