A corporation promises to pay you $4 a year for 20 years and $100 after 20 years. What is the maximum amount you would pay for the security if you wanted to earn 8 percent?
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A corporation promises to pay you $4 a year for 20 years and $100 after 20 years. What is the maximum amount you would pay for the security if you wanted to earn 8 percent?
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- If a corporation promises to pay you $80 per year for three years and $1,000 after three years, what is the maximum amount you would lend today if you wanted to earn 8%?You expect to receive $150,000 per year on a contract that will last 5 years. You are trying to compare this offer to a lump sum payment. If you can earn 5% on your investments, how much is the contract worth to you today?You want to buy a $170000 home. You plan to pay $34000 as a down payment, and take out a 20 year loan at 4.5% interest for the rest. After 14 years, you decide to pay off the entire loan.a) What is the amount of the payment? b) What is the outstanding principal after 14 years?c) If the bank charges 3.5 points on the loan, what is the amount charged for points?d) If the bank charges 3.5 points on the loan, what is the true interest rate?
- 1. If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years? 2. What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually? 3. Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don’t save any additional funds?Your friend offers to pay you an annuity of $2,500 at the end of each year for 10 years in return for cash today. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? Please show your work in excelAssume that Social Security promises you $32,000 per year starting when you retire 45 years from today (the first $32,000 will get paid 45 years from now). If your discount rate is 4%, compounded annually, and you plan to live for 14 years after retiring (so that you will receive a total of 15 payments including the first one), what is the value today of Social Security's promise?
- Assume that Social Security promises you $40,000 per year starting when you retire 45 years from today (the first $40,000 will come 45 years from now). If your discount rate is 7%, compounded annually, and you plan to live for 20 years after retiring (so that you will get a total of 21 payments including the first one), what is the value today of Social Security's promise?4. You wish to purchase a house that costs $294,000, and the bank requires you to have 12% of the purchase price as a down payment. Your annual salary is $44,000 and you can save 18% of this salary every year. How long will it take for you to save for the required down payment? about _____ years?Assume that Social Security promises you $40,000 per year starting when you retire 45 years from today (the first $40,000 will come 45 years from now). If your discount rate is 7%, compounded annually, and you plan to live for 15 years after retiring (so that you will get a total of 16 payments including the first one), what is the value today of Social Security´s promise?
- 3. A bank offers to pay you a stated annual rate of 5%, compounded daily. How many years will it take you to double your money in this account? 5. You are offered an investment that will pay you $2000 in one year, $4000 the next year, $6000 the next year, and $8000 at the end of the next year. You can earn 12 percent on very similar investments. What is the most you should pay for this one?A businessman needs P50,000 for his operations. One financial institution is willing to lend him the money for one year at 12.5% discount rate. Another lender is charging 14%, with principal and interest payable at the end of one year. A third financier is willing to lend him P50,000 payable in 12 equal monthly installments of P4,600. Which offer is the best for him? Validate your answer.You decide to purchase your own property. The estimated purchase price is $1,600,000. You obtain 90% financing from the bank, 7% fixed rate for 25 years. How much do they have to pay the bank every year? How much do you still owe the bank in 14 years?