Accounting and Finance Foundations

Unit 10

Accounting and Finance Foundations Unit 10: Credit 799

Credit

Chapter 22

Lesson 22.18

Student Assignment

Culminating Project B

Calculate the applicable answer for each of the following independent situations for Newton Park using

time value of money concepts. Microsoft Excel may be used if desired.

1. Newton Park would like to purchase a Dippin’ Spots ice cream cart in three years. A Dippin’ Spots cart
   is expected to cost $8,500. Newton Park has $7,000 currently available in a special savings account
   which is earning five percent interest annually. Will Newton Park have enough cash to buy a Dippin’
   Spots cart in three years?


2. The employees of Newton Park contribute $135,000 at the beginning of each year to a company sav-
   ings plan. The savings plan guarantees a return of four percent each year. What will be the value of
   the company savings plan at the end of five years?


3. Newton Park estimates that its rides and equipment repair expense will be $30,000 per year for the
   next six years. The market interest rate is four percent annually. How much cash does Newton Park
   need to have today to pay these future repair expenses?


4. Newton Park expects to have $25,000 in four years to purchase a caricature cart. Assuming an annual
   interest rate of three percent, how much does Newton Park have available today to purchase a carica-
   ture cart in the future?


5. Newton Park is investing $500,000 today in an investment which earns six percent annually. Is the
   park investing enough to fund a $750,000 3-D ride in six years? If so, how much will it have in the
   investment account? If not, how long does it need to invest the funds to have enough for the ride?