03. You borrow $5000 today. The loan is due in 5 years, with interest at ji = 7%. It is agre that you can instead pay $1000 one year from now, $X two years from now and $2000 thre years from now. If money is worth j4 = 8%, what is the value of X?

03. You borrow $5000 today. The loan is due in 5 years, with interest at ji = 7%. It is agre that you can instead pay $1000 one year from now, $X two years from now and $2000 thre years from now. If money is worth j4 = 8%, what is the value of X?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 4. The interest rate on a savings account is 3%. Youdeposit £100 today, then £100 at the end of the…

A: The objective of the question is to find the value of x that will empty the savings account after…

Q: a ) How much money has to be invested today in a security that promises to pay 20000 Omani Riyals at…

A: Following is the answer to the question.

Q: Q4. You plan to save the following amounts: 3,095 today 7, 566 per year for the next 10 years 8,390…

A: Savings amount today = $3095Amount for the next 10 years = $7566Amount next 1 year = $8390Amount for…

Q: hat is the present value of CD with 4% annual interest that matures in 1 year with a value of $3000?…

A: We can determine the PV of an amount using the formula below: PV = FV(1+r)n Where FV = future value…

Q: 2. You need to save up for P5,500 in I year. How much should you save now if the bank offers a rate…

A: >Present value is the value of future value that can be earned today. >This can get…

Q: 21. You borrowed 75 percent of a new car priced at $20,000 with an interest rate of 7 percent…

Q: Q1. You plan to contrībute Ł6,000 at the end of every three months (that is, at each quarter-end) in…

A: In order to know the time period required to reach a certain financial goal of an individual or…

Q: 2. What is the size of 8 equal annual payments to repay a loan of $1,000? The first payment is due…

A: Installment is the amount of periodic payments a borrower makes to its lender in order to pay back…

Q: 4) You need to have $15,000 in 3 years to put as down-payment on the house. You currently have…

A: The concept of time value of money will be used here. When determining the present value, we use the…

Q: How long will it take for a CD to double, if money earns a simple interest rate of 4.8%? Round up…

A: Interest means the extra amount which we received because of investment made and will be paid in…

Q: Consider a dollar amount of $500 today, along with a nominal interest rate of 9.00%. You are…

A: The future value of the current deposit can be found by using Excel sheet FV function where the…

Q: Imagine that you have $8,000 to invest for 19 years. How much more interest will you earn if you…

A: When we are investing into particular security, the value of it increases over the period of time.…

Q: a. How much is the monthly amortization? b. How much is the total interest?

A: Answer:

Q: your given the following information about a home loan: loan amount 300000 number of years 25 years…

A: As per the Given Informatin we have, Loan= 300,000 Interest Rate Given=7% Upfront Rate=3% Total…

Q: ! Pls answer ! Engineering Economics (bartleby = 3 max questions) 1. Marta invest P50000 into an…

A: The number of years that it will take to reach a financial goal: The number of years it will take to…

Q: 6. Future values (S2.1) If you invest $100 at an interest rate of 15%, how much will you have at the…

A: Future value is computed by following formula-FV = A × (1+ r)nwhere,FV = future value A = Amount…

Q: 4. You plan to borrow $5001.00 now and repay it in 25 years as equal annual payments that will be…

Q: 3. Suppose we need to borrow $150,000 at an APR of 6% to buy a new house. a. What will be the…

A: Calculation of Monthly Payment and Interest Paid: Excel Spreadsheet:

Q: 4. Suppose our savings account ($937.33) pays us compound interest with monthly compounding.…

A: Compounding is related to earning interest on interest. The compounding interest is more beneficial…

Q: Suppose you took out a 20 year mortgage for $280,000 with an APR of 2.772%, but you want to pay it…

A: A mortgage is a loan taken out to purchase or maintain a property. The loan is covered as the…

Q: Suppose that you wish to buy a new home that will cost you $400,000. You must put $80,000 down, and…

A: A mortgage is a loan that allows an individual to purchase a home or property. The borrower agrees…

Q: 4) You have a $3000 amortized loan that you will make monthly payments of $1200 to pay off (the last…

A: Loan amount = $3000Yearly payment = $1200Interest rate = 7.1%Period = 3 years

Q: Investment A costs P20,000 and pays back P23,000 two years from now. Investment B costs P16,000 and…

A: The concept of the time value of money states that the value of cash or money has a higher worth…

Q: 1. This problem relates to Future Value, and Future income streams. Assume continuous compounding of…

A: PRESENT VALUE Present value, also known as present discounted value, is the value of an expected…

Q: P = ? 2.000.000 6 8.000.000 12 6.000.000 14

Q: You took a loan of 20000 KD today at an interest rate of 4.5%. You agreed to pay back the loan in 6…

A: N = 6 years i= 4.5% To calculate annual repayments , calculate PMT Annual repayment amount=…

Q: Q1. (10 marks) You are considering taking a housing loan. The loan amount is INR 40 lakhs. If the…

A: Loan installment is that which is paid by borrower to lender for a specified period of time. This…

Q: Time value. You can deposit $12,000 into an account paying 6% annual interest either today or…

A: The amount that a present investment will gain in value over time when kept in a compound interest…

Q: 4. The interest rate on a savingsaccount is 3% . You deposit£100 today, then £100 at theend of the…

A: The objective of the question is to find the value of x that will empty the account after the final…

Q: Finance Calculate the price of an FRA (Forward Rate Agreement) that starts in 30 days and ends in 60…

A: Forward rate agreement It involves two parties. One pays fixed interest rate in exchange of the…

Q: Imagine that you have $7,000 to invest for 9 years. How much more interest will you earn if you…

A: Interest is the cost of borrowing or lending the money.

Q: Calculate the future value of $9,000 invested (single amount) for ten years in an account with an…

A: Information Provided: Present amount = $9000 APR = 6.3% Period of investment = 10 years NOTE:…

Q: Suppose you have two loans: one SR 2500 that is due 3 months from now with 5% annual simple interest…

A: Given information: There are two loans : Loan 1 : SR 2500 Loan 2 : SR 1500 Time period : Loan 1 : 3…

Q: 3. Suppose you recently bought a house for R1 650 000 and secured a home loan from the bank, with an…

A: Note : As per HONOR code, we cannot provide solution for multiple questions. Here we are solving…

Q: 5. In an investment, I have a full payback with an amount of P500,000.00 after 20.9123 years. If we…

A: 5. To calculate the number of times first we need to calculate the present value then, divide the…

Q: If you want to have 14,000 at the end of year 5, how much should you have to save each year if the…

A: given, FV = 14000 n = 5 r= 3%

Q: At i = 10% per year and a loan amount of $10,000. If N= 20, what are the payments and future value?…

A: A sequence of payments of equal amounts in equal intervals of time can be called the annuity. Loan…

Q: 8. You expect to have $8,000 in one year. A bank is offering loans at 4.5% interest per year. How…

A: Amount after 1 year (FV) = $8000 Interest rate (r) = 4.5%

Q: 1.6 Today you have P to invest in a security that pays an interest rate of r per year and compounds…

A: Since you have posted a question with multiple sub-parts, we will provide the solution only to the…

Q: 4. If you deposit $1000 in one year, $2000 in two years, and $3000 in three years, how much will you…

A: Future value (FV) is the value of an investment or cash flow at a specific point in the future,…

Q: Suppose you want to accumulate $20,000 for a down payment on a house in 5 years. How much must you…

A: Compound = Monthly = 12Future Value = fv = $20,000Time = t = 5 * 12 = 60Interest Rate = r = 5 / 12 %

Q: You expect to have $12,000 in one year. A bank is offering loans at 5.5% interest per year. How much…

A: In this question we have to calculate present value of $ 12,000 in one year at 5.5% interest rate.…

Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Q3. You borrow $5000 today. The loan is due in 5 years, with interest at ji = 7%. It is agreed
that you can instead pay $1000 one year from now, $X two years from now and $2000 three
years from now. If money is worth j4= 8%, what is the value of X?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

If you invest your P3,000 every year at 4% interest rate, how many months does it take to be worth P117,247.80? (do not include the unit) *
3aWhat is the fair market value of a payment of $519 one month from today and $220 4 months from today with a rate of return of 5%? 3b One payment is made 4 months from today and another payment of the same amount is made 2 months after the first payment. If money can earn 1.5%, what are the equal payments that are made to pay off this loan of $793?
a. Renting a machine will need monthly payments of $6,000 for the next 5 years (i.e., at t = 1, 2, …, 60). However,if we choose to buy the machine today,which is (t = 0) will cost $320,000. Assume the machine's value is zero after 5 years. It is possible to borrow and lend at a semi-annually compounded interest rate of 6% (APR). Would it be better to buy or to lease? Explain. b.We are currently at year 0. It is worthy to note that there is a perpetuity that pays $250 at the end of each odd year and $150 at the end of each even year. The term structure is flat at 10% per year. Evaluate the present value of this perpetuity. c.Assume the CAPM is valid.The return on asset ABC is perfectly correlated with the return on market portfolio. Your friend makes the following statetment: a portfolio that had a dollar invested and at the same time,shorting one dollar of the market portfolio will have no systematic risk. Comment on this and whether it is feasible.
g What is the future value of an ordinary annuity of S10 compounded at 10 percent? What would be the future value if it were an an- nuity due? h. You have just borrowed $100,000, and you agree to pay it back over the next 25 years in 25 equal end-of-year payments plus 10 percent compound interest on the unpaid balance. What will be the size of these payments? LWhat is the present value of a $1,000 perpetuity discounted back to the present at 8 percent? 000 per year for 7 years
A).$4500 will be paid 6 years and 10 months now. Find present value of payment if interest is at rate j2 = 9%. Use the practical metho. B). An investment fund guarantees to double your money in five years. What rate of j2 is implied ? C). If money doubles at certain rate of interest compound monthly in six years. How long will it take to the same amount of money to triple in valuy ?
If money's worth is 7% today and you are looking for a property worth P1M. How much is the discount when it was sold to you, after 8 months, for only P975,000.00. What was the rate of discount? the rate interest?
A loan of $5000 is taken out today. It is due with interest at j4 = 8% in 2 years. Instead, the borrower negotiates with the lender to pay $2500 in 1 year and $X in 3 years. If the lender can reinvest any payment at j₂ = 5%, what is the value of X? $3395.34 B. $2493.59 $3038.93 $3581.68
4. If you receive $116 each month for 28 years and the discount rate is 0.08, what is the present value? (show the process and can use financial calculator)
Help me fast so that I will give Upvote.
Don’t use excel, please answer asap