CH3.7. Future Value of Annuity. Michelle is attending college and has a part-tim
ID: 2638390 • Letter: C
Question
CH3.7. Future Value of Annuity. Michelle is attending college and has a part-time job. Once she finishes college, Michelle would like to relocate to a metropolitan area. She wants to build her savings so that she will have a "nest egg" to start her off. Michelle works out her budget and decides she can afford to set aside $160 per month for savings. Her bank will pay her 12% annually on her savings account. What will Michelle's balance be in 2 years?
CH4.2 Deductions. Helga and Staffan are married and file a joint return. The standard deduction for their filing status is $7,900. They have the following itemized deductions:
Medical Bills that exceeded the 7.5% limit $3,000
Interest expense $4,500
State income taxes $2,500
Miscellaneous deductions $ 550
Should Helga and Staffan itemize their deductions or use the standard deduction?
CH4.3. Itemized Deduction.Emma's adjusted gross income is $30,000. She has $2,200 in unreimbursed medical expenses. How much in medical expenses can Emma claim as an itemized deduction?
CH4.4. Impact on Taxes. Jacques has a marginal tax rate of 15%. He suddenly realizes that he neglected to include a $2,000 tax deduction. How will this oversight affect his taxes?
CH4.4. Impact on Taxes. Jacques has a marginal tax rate of 15%. He suddenly realizes that he neglected to include a $2,000 tax deduction. How will this oversight affect his taxes?
Explanation / Answer
CH3.7. Future Value of Annuity Annuty value: The future value of an annuity is the value of its periodic payments each enhanced at a specific rate of interest for given number of periods to reflect the time value of money. In other words, future value of an annuity is equal to the sum of face value of periodic annuity payments and the total compound interest earned on all periodic payments till the future value point. FV of Ordinary Annuity = R