Kenneth R. Szulczyk

7. Commercial banks, savings institutions, and credit unions.


8. Common U.S. government institutions referred in this book are Federal Deposit Insurance
   Corporation, Fannie Mae, Freddie Mac, and Sallie Mae.


9. College bubble is not likely to affect France. Once French students graduate or drop out, and
   they cannot find employment, subsequently, they have no debts to repay. The French
   students only lose the value of their time at the university.

Answers to Chapter 6 Questions

1. Net income is $50,000 + $60,000 - $100,000 - $30,000 - $30,000, which equals -$50,000.


2. Retained earnings are $20,000 +$50,000 - $60,000 = $10,000. Do not include the sales of
   stock because stock transactions are recorded under the common stock account.


3. Cash balance equals $10,000 - $70,000 +$100,000 - $10,000 = $30,000. Do not include the
   accounts receivable because these are credit sales and the business did not collect cash.


4. We calculated

   

$ 7 , 604. 49

1 0. 05

$ 1 , 000 , 000

1 100





0 TT

+i

PV

PV =

5. We calculated PVT=PVT 1 +iT$ 5 , 000  1  0. 1 ^50 $ 586 , 954. 26

6. Substitute which variables you know into the equation, and then use algebra to solve for the
   interest rate, i, equaling 9.54%.

ܸܨଶ=ܸܲ଴( 1 +݅)்

$1, 200 =$1, 000 ( 1 +݅)ଶ

݅= 0. 0954

7. Using the Rule of 72, your bank account doubles in 24 years, or 72 ÷ 3.


8. Using the Rule of 72, the U.S. economy doubles in 14.4 years, or 72 ÷ 5.


9. We calculated

     

2 , 808. 02

1 0.07

1,000

1 0.07

1,000

1 0.07

1,000

(^01) + 2 =$

$

+

+

$

+

+

$

PV 0 =^

10. We calculated $2928.54 below. Question was not clear because we do not know when the
    deposit was made. Consequently, we showed deposits being made at the beginning of the
    period.