Solution Manual for Taxation of Individuals 10th Edition by Spilker

# Solution Manual for Taxation of Individuals 10th Edition by Spilker

\$15.00

Edition: 10th Edition

Resource Type: Solution manual

## Solution Manual for Taxation of Individuals 10th Edition by Spilker

1. 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.
2. Future value—The future value of a number of dollars is the amount that it will increase to in the future at i interest rate for n periods. The future value is the principal plus accumulated interest compounded each period.

Present value—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 at i interest rate for n periods. It is the inverse of future value. In compound discounting, the interest is subtracted rather than added as in compounding.

1. \$10,000 x 2.59374 = \$25,937 (rounded to the nearest dollar).
2. \$8,000 x .38554 = \$3,084 (rounded to the nearest dollar).
3. 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 i = 5% n =4 i = 10%; n =7 i = 14%; n = 10 FV of \$1 1.21551 1.94872 3.70722 PV of \$1 0.82270 0.51316 0.26974 FV of annuity of \$1 4.31013 9.48717 19.33730 PV of annuity of \$1 3.54595 4.86842 5.21612
1. \$1,000 x 14.48656 = \$14,487. (rounded to the nearest dollar)

Authors’ Recommended Solution Time

(Time in minutes)

 Mini-exercises Exercises 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

MC–1

 \$500,000 ´ 0.46319 (Table C.2, n=10, i=8%) = \$231,595

MC–2

 \$15,000 ´   6.14457 (Table C.4, n=10, i=10%) = \$92,169

MC–3

 \$100,000 (no PV) = \$100,000 +   \$100,000 ´ 0.92593 (Table C.2, n=1, i=8%) = 92,593 +   \$ 30,000 ´ 9.81815 (Table C.4, n=20, i=8%) = 294,545 Total = \$487,138

MC–4

 \$25,000 ´ 15.93742 (Table C.3, n=10, i=10%) = \$398,436 \$15,000 ´ 57.27500 (Table C.3, n=20, i=10%) = \$859,125

It is much better to save \$15,000 for 20 years.

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