2. The following are exercises in present values: a. $100 at the end of three years is worth how much today, assuming a discount rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent?
Q: Roland just put RM1,000 in the fixed deposit and intend to leave it there for 10 years. If the bank ...
A: Formula Future value = PV*(1+(i/c))n*c Where PV = Present value i.e. RM1,000 i = Interest rate i.e. ...
Q: The following cash flows have been identified by Company A for a potential capital investment projec...
A: Present value of cash inflows = [Year 1 cash flow/(1 + r)1] + [Year 2 cash flow/(1 + r)2] ...
Q: BEST reason or reasons for use of commercial mortgage debt by investors: O Magnify equity returns & ...
A: Commercial real estate (CRE) is property that generates income solely for business (rather than resi...
Q: An installment contract for the purchase of a car requires payments of $346.89 at the end of each mo...
A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at t...
Q: Find the compound amount and compound interest in Php62,000 at the end of 3 years at 8% compounded q...
A: As you have asked multiple questions, we will solve the first question as per the policy presented b...
Q: What is the compound amount and interest if Php 10,000 is invested at 3.6% compounded monthly for 2 ...
A: we know that, A=P(1+rn)n×t now, A= amount after time + (future value) P= principal amount (initial v...
Q: The XYX company has a bond an 8-year bond with a 6% coupon paid semi-annually 2. The XYX company has...
A: The bond price is equal to sum of the present value of all the future cash flows over the tenure of ...
Q: Pearson International Publishing Company is trying to decide whether to revise its popular textbook,...
A: The notion of present value asserts that a sum of cash today is worth greater than the same sum in t...
Q: Beginning inventory consist of 800 units at P200 each. Purchases made for the period: January 18 for...
A: In FIFO method, the inventory that comes first is sold first. FIFO stands for 'First in first out'.
Q: emand loan was paid off with payments of $3,000 on April 10th, $2,000 on September 25th and a final ...
A: loans are paid by the installment payment and these are paid by the payment that carry the payment f...
Q: A television set is for sale at ₱ 13,499 in cash or on installment terms,₱ 2,550 each month for the ...
A: Present Value The present value is the value of cash flow stream or the fixed lump sum amount at tim...
Q: Consider a European call option struck "at-the-money", meaning the strike price equals current stock...
A: With the given information, we will try to find out the precise value of delta,
Q: A pump is required for 10 years at a remote location. The pump can be driven by an electric motor if...
A: Present worth analysis is very important while selection of alternative and alternative with less pr...
Q: Assume the current price of copper is $1675 per tonne, the term structure of interest rate is flat a...
A: Arbitrage: If the cost of entering into a strategy is lower than the proceeds from the strategy, a r...
Q: Situation: Your friend came to you for advice whether or not to invest in a particular stock which p...
A: Given: Profit = $200,000 Probability of profit = 30% Loss = -50,000 Probability of loss = 70%
Q: Differentiate annuity dues and deferred annuities.
A: An annuity can be divided into two types: Annuity due: Unlike a regular annuity, annuity due paymen...
Q: QUESTION 2 David owes a business partner $5539 which was due 2 years ago and $3584 which is due in 1...
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type]) Rat...
Q: What is the impact of annuity dues in consideration to business matter?
A: An annuity due is one whose payment is due right away at the start of each period and the difference...
Q: Explain what the yield curve is, what determines its shape, and how you can use the yield curve to h...
A: The yield curve: The yield curve depicts the yields of bonds with similar credit ratings but with di...
Q: If you have $2,500 to invest and need to withdraw $4,430 at some time in the future, what is the min...
A: Amount for investment = $2500 Interest rate = 5% Withdraw after some time = $4,430
Q: Identify whether each of the following is an example of adverse selection or moral hazard. A. Joe be...
A: A phenomena where there is asymmetric information between the parties involved in a transaction are...
Q: Gasoline Eclectic First Cost $3400 $6000 Annual operating cost $1200 S750 Annual maintenance $300 $5...
A: Present worth of alternative is very important while selecting and comparing different alternatives ...
Q: Mr.Myers has contributed $137.00 at the end of each month into an savings fund paying 5% per annum C...
A: Given In the question it is given that Mr.Myers has contributed $137.00 at the end of each month. I...
Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over t...
A: Required rate of return is 14% Dividend paid in year -8 is $15.50 Dividend growth rate is 6% To Find...
Q: Francorp has a break-even point of $175,000. Ifactual sales are $225,000 then what is the margin of ...
A: The margin of safety is an investment idea that states that an investor should only buy assets when ...
Q: Which of the following orders allows for partial execution?
A: FOK (Fill or Kill Order): This type of order allows being executed immediately at the specified pri...
Q: Beginning Inventory $11,500 Dairy Alternative Purchases (+) $1,000 Produce Purchases (+) $500 Protei...
A: With the help of the given chart ,
Q: s output has been constant at Y every year. In year 0, it finds an investment project that will incr...
A:
Q: s. What is the present value of these cash flows if the discount rate is 189%?
A: Present Value: It represents the present worth of the future annual cash flow stream. It is compute...
Q: Garrett wants to accumulate at least $35,000 by depositing $1,5 month into a fund that earns interes...
A: Amount to be accumulated is $35000 Monthly deposit is $1500. Rate 4.5% compounded monthly
Q: Your plan is to have $40,000 in your account, 13 years from today. You can invest in an account that...
A: Future value required (FV) $40,000 Interest rate = 8.05% Monthly interest rate (r) = 8.05%/12 = 0.67...
Q: 16. A student borrows $58,600 at 6.0% compounded monthly. Find the monthly payment and total interes...
A: 16 ) In this question we are given, PV = $58600 r = 6.0 % t = 25 years n = 25 × 12 = 300 months i = ...
Q: 11. A man deposited P6,000 at a rate of 10% per annum. However, to add more fund, he deposits P500 p...
A: Future value (FV) Future value (FV) of a present amount (PV) is calculated as shown below. FV=PV×1+i...
Q: Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return...
A: Given: Tax rate 30% Particulars Debt Common shares Preferred shares Coupon rate/Dividend ...
Q: Suppose you have a 1,200,000 US dollar payable coming due in June and that the spottoday is .98 US/C...
A: Hedging: Multinational companies with receivables and payables in several currencies seek to hedge t...
Q: Q5.ABC Corporation has been growing at a rate of 12% per year and it is expected this growth rate in...
A: Dps1= Dividend at end of year 1 =$3 Rate = 12% Or = 0.12 in decimals
Q: What is a balloon mortgage? O A mortgage in which a large portion of the borrowed principal is repai...
A: Balloon mortgage is a type of mortgage in which periodic payments are low. A balloon mortgage does n...
Q: Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest an...
A: Interest Payment is calculated on the debt part out of the total funds of the company. Net Income is...
Q: A pump is required for 10 years at a remote location. The pump can be driven by an electric motor if...
A: Interest Rate = 7% Time Period = 10 Years First cost = $3,400 Annual operating cost = $1,200 Annual ...
Q: Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return...
A: The appropriate arrangement and combination of sources of finance required to manage the company wit...
Q: Lea borrows PhP 100,000 at an annual effective interest rate of 4% and agrees to repay it with 30 le...
A: Given P=100000 r = 4% per year / 12 months = 0.0033% per period n =10 years ×12 Months=120 total per...
Q: Mr. James K. Silber, an avid international investor, just sold a share of Néstle, a Swiss firm, for ...
A: Forward Market: It is the marketplace where financial instruments are offered advance price for fu...
Q: A client approaches you with the news that she plans to retire on a ranch worth R3 000 000. She plan...
A: Future Value = R3,000,000. Time Period = 20 Years Interest Rate = 12%
Q: Find the present value of the following ordinary deferred annuity. Periodic Made Payment Period Peri...
A: The problem relates to the time value of money wherein we should compute first the annual effective ...
Q: A pump is required for 10 years at a remote location. The pump can be driven by an electric motor if...
A: Interest Rate = 7% Time Period = 10 Years Gasoline First cost = $3,400 Annual operating cost = $1,20...
Q: A demand loan of $3000.00 is repaid by payments of $1500.00 after two years, $1500.00 after four yea...
A: Initial principal amount = $3000 Rate of interest for Ist 2 years = 5% per year Total amount after 2...
Q: 13. A businessman borrowed P750,000 with interest at a rate of 7% compounded semi- annually. He agre...
A: Present Value The present value is the value of cash flow stream or the fixed lump sum amount at ti...
Q: Current market price of ABC stock is $77 ABC Stock price after 30 days =$80 ABC Stock price after 45...
A: A) Price or face value of call option as on today = MAXIMUM,{0, CURRENT MARKET PRICE(CPM)-EXCISE ...
Q: Mezzanine Debt is generally collateralized by O A first deed of trust O A high rate of interest O A ...
A: Mezzanine debt is a financing instrument which is a hybrid of debt and equity. It has higher risk th...
Q: The O.K. Railroad needs to raise $9.5 million for capital improvements. One possibility is a new pre...
A: We need use cost of preferred stock formula to calculate the issue price of new stock. Cost of prefe...
Step by step
Solved in 4 steps
- What is the aggregate present value of $500 received at the end of each of the next three years, assuming a discount rate of (i) 4 percent? (ii) 25 percent?$100 at the end of three years is worth how much today, assuming a discount rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent?What is the present value of $2,000 received today, $2,500 received at the end of each of the next ten years and $1,000 received at the end of the 11th year , assuming a required rate of return of 6%?
- If the present value of $500 expected to be received three years from today is $200, what is the discount rate?a. What is the present value of 15 annual payments of $100, with the first payment one year from now, if the discount rate is 0.05? b. What is the present value of 15 annual payments of $100, with the first payment right now, if the discount rate is 0.05? c. What is the present value of 15 annual payments of $100, with the first payment five years from now, if the discount rate is 0.05? d. At what discount rate would the present value of 15 annual payments of $100, with the first payment right now, be 0? e. How many annual payments of $100, with the first payment right now, would it take to be worth more than $1,000, if the discount rate is 0.05? f. What is the value of 15 annual payments which begin at $100 one year from now and increase at 2% per year thereafter, if the discount rate is 0.05?You are calculating the present value of $1,000 that you will receive five years from now.Which table will you use to obtain the present value factor to multiply to calculate thepresent value of that $1,000?a. Present Value of $1 tableb. Future Value of $1 tablec. Present Value of Ordinary Annuity of $1d. Future Value of Ordinary Annuity of $1
- Consider two streams of cash flows, A and B. Stream A’s first cash flow is $9,800 and is received three years from today. Future cash flows in Stream A grow by 3 percent in perpetuity. Stream B’s first cash flow is −$9,100, is received two years from today, and will continue in perpetuity. Assume that the appropriate discount rate is 11 percent. a. What is the present value of each stream? b. Suppose that the two streams are combined into one project, called C. What is the IRR of Project C?3. To find the present value of a sum of sh. 10,000 to be received at the end of each year for the next 5 years at 10% rate, we use: A. Present value of a single cash flow table B. Present value of annuity table. C. Future value of a single cash flow table D. Future value of annuity tableConsider two streams of cash flows, A and B. Stream A's first cash flow is $10,000 and is received three years from today. Future cash flows in Stream A grow by 3 percent in perpetulty. Stream B's first cash flow is -$8,900, is received two years from today, and will continue in perpetuity. Assume that the appropriate discount rate is 11 percent. a. What is the present value of each stream? (A negative amount should be indicated by a minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Stream A Stream B b. Suppose that the two streams are combined into one project, called C. What is the IRR of Project C? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR % c. What is the correct IRR rule for Project C? Accept the project if the discount rate is equal the IRR. O Accept the project if the discount rate is above the IRR. Accept the project if the discount rate is…
- Find the present value of the following future amount. $500,000 at 9% compounded annually for 25 years What is the present value? $ (Round to the appropriate cent.)Suppose that a stream of equal payments of amount $25000 per year is to continue in perpetuity.At the interest rate of 10% compute:a. the present value of this entire stream of benefits.b. the present value of the benefits beginning at the end of 100th year.c. the present value of the first 100 years of benefits.Q. No. 02: Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities.$300 per year for 10 years at 10%$100 per year for 5 years at 5%$300 per year for 5 years at 0%Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.