Solution Manual for Taxation of Individuals 10th Edition by Spilker
ANSWERS TO QUESTIONS
 The time value of money is the idea that a dollar received today is worth more than a dollar to be received at any later date because it can be invested today to earn interest over time.
 Future valueâ€”The future value of a number of dollars is the amount that it will increase to in the future atÂ iÂ interest rate forÂ nÂ periods. The future value is the principal plus accumulated interest compounded each period.
Present valueâ€”The present value of a number of dollars, to be received at some specified date in the future, is that amount discounted to the present atÂ iÂ interest rate forÂ nÂ periods. It is the inverse of future value. In compound discounting, the interest is subtracted rather than added as in compounding.
 $10,000 x 2.59374 = $25,937 (rounded to the nearest dollar).
 $8,000 x .38554 = $3,084 (rounded to the nearest dollar).
 An annuity is a term that refers to equal periodic cash payments or receipts of an equal amount each period for two or more periods. In contrast to a future value of $1, or a present value of $1 (which involves a single contribution or amount), an annuity involves a series of equal contributions for a series of equal periods. An annuity may refer to a future value or a present value.
6. 
Table Values 

Concept  iÂ = 5%Â nÂ =4  iÂ = 10%;Â nÂ =7  iÂ = 14%;Â nÂ = 10  
FV of $1  1.21551  1.94872  Â 3.70722  
PV of $1  0.82270  0.51316  Â 0.26974  
FV of annuity of $1  4.31013  9.48717  19.33730  
PV of annuity of $1  3.54595  4.86842  Â 5.21612  
 $1,000 x 14.48656 =Â $14,487. (rounded to the nearest dollar)
Authorsâ€™ Recommended Solution Time
(Time in minutes)
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Miniexercises 
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Exercises 
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Problems 

No.  Time  No.  Time  No.  Time 
1  2  1  10  CP1  20 
2  2  2  15  CP2  20 
3  6  3  15  CP3  20 
4  6  4  15  CP4  15 
5
6 7 8 9 10 11 12

3
3 3 3 3 3 3 3 
5
6 7

5
10 8 
PA1
PA2 PA3 PA4 PB1 PB2 PB3 PB4

20
20 20 15 20 20 20 15 
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ANSWERS TO MINIEXERCISES
MCâ€“1Â Â Â Â Â Â Â Â Â Â Â Â
$500,000 Â´ 0.46319 (Table C.2, n=10, i=8%)  =  $231,595 
MCâ€“2Â Â Â Â Â Â Â Â Â Â Â Â
Â $15,000 Â´Â Â 6.14457 (Table C.4, n=10, i=10%)  =  $92,169 
MCâ€“3
Â Â Â Â $100,000 (no PV)  =  $100,000 
+Â Â $100,000 Â´ 0.92593 (Table C.2, n=1, i=8%)  =  92,593 
+Â Â $ 30,000 Â´ 9.81815 (Table C.4, n=20, i=8%)  =  Â Â 294,545 
Total  =  $487,138 
MCâ€“4
$25,000 Â´ 15.93742 (Table C.3, n=10, i=10%)  =  $398,436  
$15,000 Â´ 57.27500 (Table C.3, n=20, i=10%)  =  $859,125  
It is much better to save $15,000 for 20 years.