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Home-My( x B, Courses-B x" e l chegg.comx 9 Chegg Stud x" The Dollar-v × e The Dollar-v × Lj wileyPLUS xy Problem 6-7 x Q Finance 313 × C Secure https://edugen.wileyplus.com/edugen/shared/assignment/test/aprint.uni Print by: TIANYU ZHAO F'17 ACCT372 SECT 02 HENRY EXTRA CREDIT Problem 6-7 Answer the following questions related to Blossom Inc. Click here to view factor tables Blossom Inc. has $555,100 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $73,659 at the end of each year for 12 years, and the other is to receive a single lump-sum payment of $1,742,142 at the end of the 12 years. Which alternative should Blossom select? Assume the interest rate is constant over the entire investment. Alternative Two Blossom Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $750,200. The purchase agreement specifies an immediate down payment of $202,800 and semiannual payments of $67,489 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction? Interest rate 96 semiannually Blossom Inc. loans money to John Kruk Corporation in the amount of $831,200. Blossom accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Blossom needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually, what is the amount Blossom will receive on the sale of the note? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 declmal places, e.g. 458,581.) Amount received on sale of note Blossom Inc. wishes to accumulate $1,344,700 by December 31, 2027, to retire bonds outstanding. The company deposits $202,800 on December 31, 2017, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,344,700 is available at the end of 2027. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Annuity of value of quarterly deposits Question Attempts: 0 of 15 used G2000-2017 by John wiley or related comparies. All rights ACCT372 FINALEXAM pdf Show All

Explanation / Answer

A / 1 B C D 2 Blossom Inc 3 Loan amount to John Kruk Corpn $831,200 4 Rate of Interest 8% p.a 5 Term 7 Years 6 Interest payable semianually 2 7 after receiving interest for 2 Years 8 Blossom want to sell the note to Chicago National Bank 9 Rate of Interest 10% p.a 10 Interest compounding semianually 2 compounding 11 Balance number of years 5 =C5-C7 12 What is the amount that Blossom will receive? 13 Blossom will receive from Chicago National Bank $510,284.70 =PV(C9/C10,C11*C10,0,-C3,0) 14 15 Blossom Inc want to accumulate the corpus $1,344,700 16 Corpus required date 31-Dec-27 17 Company deposits amount $202,800 18 Company deposits amount $202,800 on 31-Dec-17 19 Rate of Interest on deposits of $202,800 10% 20 Rate of interest compounds 4 Quarterly 21 No of Years(term) 10 Years 22 So we have to find out future value of this deposit $544,530.95 =FV(C19/C20,C21*C20,0,-C17,0) 23 Therefore the remaining corpus required will be $800,169.05 =C15-C22 24 So , to achieve the corpus of $800,169.05 in 10 years, the additional deposit to be invested at every quarter for 10 years 25 Term 10 Years 26 Rate of Interest 10% 27 Rate of interest compounds 4 Quarterly 28 Money required at the end of 10 years $800,169.05 29 Quarterly investment shall be $11,871.49 =-PMT(C26/C27,C25*C27,0,C28,0)

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