ACCT 3001 LSU FINAL EXAM SCRIPT 2026
COMPLETE QUESTIONS AND DETAILED
CORRECT ANSWERS
⩥ Darrien has an annual 16% compounding interest rate over five years.
If the interest rate is compounded quarterly, what is the interest rate per
compounding period? Answer:
⩥ Darrien has an annual 16% compounding interest rate over five years.
If the interest rate is compounded quarterly, what is the interest rate per
compounding period? Answer: 16/4 = 4%
⩥ If the number of periods is known, then how is the interest rate
determined? Answer: By dividing the future value by the present value
and looking for the quotient in the future value of 1 table.
⩥ Carrie wants to go on her family reunion in four years. The cost of the
cruise they are planning to take is $5,000. She found an account with a
7% compounding interest rate, but she is unsure how much money to
invest now so that she will have the money she needs in four years. How
much should she invest now? Answer:
⩥ Carrie wants to go on her family reunion in four years. The cost of the
cruise they are planning to take is $5,000. She found an account with a
7% compounding interest rate, but she is unsure how much money to
,invest now so that she will have the money she needs in four years. How
much should she invest now? Answer: To find the present value, you
must multiply the future value by 1(1+ι)η. In this case, that would be
$5,000 1(1+.07)4 = $5,000 (.7629) = $3,814.50
⩥ If Rose wants to have $570,000 from a $226,000 investment after 12
years, the interest rate (to the nearest percent) she needs is Answer:
$570,000 / $226,000 = 2.52 = Future value of 1 for 12 years at 8%
⩥ The interest rate on an investment is 10%. The investment itself pays
$30,000 at the beginning of each year for the next 10 years. The amount
paid for this investment would be Answer: =PV(0.1,10,-30000,0,1)
=$202,771
In order to determine this answer, you must multiply the present value of
the annuity due. In this case, that is: 6.759027 X $30,000 = $202,770.81,
which rounds up to $202,771.
⩥ Tom needs to withdraw $7,000 from an account once a year for the
next four years. The first withdrawal is set to be made today. The last
withdrawal should zero out the account. The accounts earns interest at
10%. The amount Tom needs to have in his bank account before the first
withdrawal can be determined by Answer: $7,000 + ($7,000 × 0.909) +
($7,000 × 0.826) + ($7,000 × 0.751)
Since Tom is trying to determine the single sum needed in his bank for
future withdrawals he will use the present value of 1 table and use
present values factors for 10% for periods 1, 2, and 3. Each present
, value factor is multipled by $7,000 and added to $7,000 to obtain the
present value amount that needs to be deposited.
⩥ Marco has purchased a boat for $800,000, and is planning to lease it
for 20 years. Annual lease payments will be required at the end of each
year. If Marco needs to earn a return of 10%, then the annual rent will be
Answer: In order to determine the annual rental, you must divide the
cost by the present value for an ordinary annuity at 10% for 20 years
(8.51356). In this case, that would be $800,.51356 = $93,968
(rounded).
⩥ On December 31, 2021, Hat Trick Manufacturing sold some old
equipment that they bought for $200,000 and had a book value of
$110,000. The purchaser agreed to a total purchase price of $150,000
with $40,000 as a down payment and equal payments of $55,000 would
be made on December 31 each of the next two years.
The agreement of sale made no mention of interest; however, 9% would
be a fair rate for this type of transaction. If the present value of an
ordinary annuity of 1 at 9% for 2 years is 1.75911, what would be
amount of the notes receivable net of the unamortized discount on
December 31, 2021 rounded to the nearest dollar? Answer: Payment x
Present Value = Note Payable$55,000 x 1.75911 = $96,751
⩥ Which of the following would be the best reporting option for cash
and cash equivalents? Answer: Cash $318,950
Cash equivalents $150,000
COMPLETE QUESTIONS AND DETAILED
CORRECT ANSWERS
⩥ Darrien has an annual 16% compounding interest rate over five years.
If the interest rate is compounded quarterly, what is the interest rate per
compounding period? Answer:
⩥ Darrien has an annual 16% compounding interest rate over five years.
If the interest rate is compounded quarterly, what is the interest rate per
compounding period? Answer: 16/4 = 4%
⩥ If the number of periods is known, then how is the interest rate
determined? Answer: By dividing the future value by the present value
and looking for the quotient in the future value of 1 table.
⩥ Carrie wants to go on her family reunion in four years. The cost of the
cruise they are planning to take is $5,000. She found an account with a
7% compounding interest rate, but she is unsure how much money to
invest now so that she will have the money she needs in four years. How
much should she invest now? Answer:
⩥ Carrie wants to go on her family reunion in four years. The cost of the
cruise they are planning to take is $5,000. She found an account with a
7% compounding interest rate, but she is unsure how much money to
,invest now so that she will have the money she needs in four years. How
much should she invest now? Answer: To find the present value, you
must multiply the future value by 1(1+ι)η. In this case, that would be
$5,000 1(1+.07)4 = $5,000 (.7629) = $3,814.50
⩥ If Rose wants to have $570,000 from a $226,000 investment after 12
years, the interest rate (to the nearest percent) she needs is Answer:
$570,000 / $226,000 = 2.52 = Future value of 1 for 12 years at 8%
⩥ The interest rate on an investment is 10%. The investment itself pays
$30,000 at the beginning of each year for the next 10 years. The amount
paid for this investment would be Answer: =PV(0.1,10,-30000,0,1)
=$202,771
In order to determine this answer, you must multiply the present value of
the annuity due. In this case, that is: 6.759027 X $30,000 = $202,770.81,
which rounds up to $202,771.
⩥ Tom needs to withdraw $7,000 from an account once a year for the
next four years. The first withdrawal is set to be made today. The last
withdrawal should zero out the account. The accounts earns interest at
10%. The amount Tom needs to have in his bank account before the first
withdrawal can be determined by Answer: $7,000 + ($7,000 × 0.909) +
($7,000 × 0.826) + ($7,000 × 0.751)
Since Tom is trying to determine the single sum needed in his bank for
future withdrawals he will use the present value of 1 table and use
present values factors for 10% for periods 1, 2, and 3. Each present
, value factor is multipled by $7,000 and added to $7,000 to obtain the
present value amount that needs to be deposited.
⩥ Marco has purchased a boat for $800,000, and is planning to lease it
for 20 years. Annual lease payments will be required at the end of each
year. If Marco needs to earn a return of 10%, then the annual rent will be
Answer: In order to determine the annual rental, you must divide the
cost by the present value for an ordinary annuity at 10% for 20 years
(8.51356). In this case, that would be $800,.51356 = $93,968
(rounded).
⩥ On December 31, 2021, Hat Trick Manufacturing sold some old
equipment that they bought for $200,000 and had a book value of
$110,000. The purchaser agreed to a total purchase price of $150,000
with $40,000 as a down payment and equal payments of $55,000 would
be made on December 31 each of the next two years.
The agreement of sale made no mention of interest; however, 9% would
be a fair rate for this type of transaction. If the present value of an
ordinary annuity of 1 at 9% for 2 years is 1.75911, what would be
amount of the notes receivable net of the unamortized discount on
December 31, 2021 rounded to the nearest dollar? Answer: Payment x
Present Value = Note Payable$55,000 x 1.75911 = $96,751
⩥ Which of the following would be the best reporting option for cash
and cash equivalents? Answer: Cash $318,950
Cash equivalents $150,000
