An annuity providing a rate of return of 4.8% compounded monthly was purchased for $51,800. The annuity pays $460 at the end of each month. e. What will be the amount of the final payment? (Round your answer to the nearest cent.) Final payment

An annuity providing a rate of return of 4.8% compounded monthly was purchased for $51,800. The annuity pays $460 at the end of each month. e. What will be the amount of the final payment? (Round your answer to the nearest cent.) Final payment

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 25E

See similar textbooks

Related questions

Q: The resident Economist in the Investment Firm you work for has generated th following expected…

A: The Capital Asset Pricing Model is a popular financial model that analysts and investors use to…

Q: Use these data to calculate the value of Imperial's preferred equity, common equity and Debt .…

A: The capital structure of a company refers to the way a company finances its overall operations and…

Q: Project S requires an initial outlay at t= 0 of $11,000, and its expected cash flows would be $4,500…

A: NPV means Net present value.It is a capital budgeting technique used for making investment…

Q: You expect a stock to pay dividends of $0.80, $1.20, $1.85, $2.00 over the next 4 years. You will…

A: The price of a stock is the sum of the present value of future dividends.

Q: 6. Given the following data: 10.4, What is the optimum portfolio under a single index model assuming…

A: The portfolio variance is 10.4%.The risk-free rate is 4.7%.

Q: a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your…

A: Terminal value is the estimated value of a business or an investment at the end of a business or an…

Q: You purchased a machine for $1.13 million three years ago and have been applying straight-line…

A: If machine is sold on the value above the book value of machine then there will be capital gains tax…

Q: You are a pension fund manager who has obligations over the years to come of: 1 2 3 4 5 CF: 6.5 7…

A: The modified duration refers to the measure of the sensitivity of the price of the bond if there is…

Q: 17) Sun Woo wants to purchase an annuity that will pay him $1,000 a month for fifteen years. If he…

A: The Present Value of Ordinary Annuity refers to the concept which dictates the discounted value of a…

Q: (Loan amortization) Mr. Bill S. Preston, Esq. purchased a new house for $140,000. He paid $10,000…

A: Purchase Price = $140,000Down Payment = $10,000Time = t = 10Interest Rate = r = 7%

Q: You are considering the following project. What is the NPV of the project? WACC of the project: 0.10…

A: NPV of a project can be found as the difference between present value of cash flow and initial…

Q: Sunland Company earns 12% on an investment that will return $390,000 6 years from now. Click here to…

A: Present Value is the current price of future value which will be received in near future at some…

Q: Refer to the following data. Suppose a portfolio consisting of 40% in Security A and 60% in Security…

A: Here,Weight of A is 40%Weight of B is 60%SecurityBetaResidual…

Q: Humphry Incorporated currently produces boat sails and is considering expanding its operations to…

A: Acquisition cost of land = $250,000Current value of land = $405,000Cost of grading and excavation =…

Q: Fester Industries’ common stock is currently selling for $30.00 per share. Next year’s dividend (D1)…

A: Price of the stock is the current selling price of the stock that can be determined by Gordon Growth…

Q: Problem 12-13 Project Cash Flows (LG12-3) You are evaluating a project for The Ultimate recreational…

A: Free cash flow is the amount which is earned by the investor from the project. It is the net amount…

Q: Determine the amount of money that must be invested now (time 0) at 5% nominal interest, compounded…

A: An effective annual rate is a financial statistic that accounts for compounding to determine the…

Q: 4.7 Convert the given interest rates in the left-hand column into the nominal rates listed in the…

A: The nominal interest rate is the rate that is not adjusted according to inflation or the number of…

Q: You own a house that you rent for $1,400 per month. The maintenance expenses on the house average…

A: Market value of property is the value at which property can be sold immediately without any much…

Q: account that pays 10% interest compounded quarterly How much will Patti have in the account in Use…

A: In compounding there is interest on interest also including the principal amount of deposits done…

Q: Using the following variables, calculate an organization's cost of debt on a $500,000 bond. • R₁: 1%…

A: The cost of debt refers to the expense that the company incurs to employ the debt capital to fund…

Q: What must the coupon rate be on the bonds? (Do not round intermediate calculations and enter your…

A: A bond's price is determined by the bond's future cash flows, which include periodic interest…

Q: A project will increase sales by $60,000 and cash expenses by $51,000. The project will cost $40,000…

A: Annual increase in sales = $60,000Annual cash expenses = $51,000Cost = $40,000useful life = 4…

Q: You own a lot in Key West, Florida, that is currently unused. The going price for similar lots is…

A: Current price $1,200,000Strike price $1,310,000Risk free rate7%Time period in years0.75Standard…

Q: ou estimate that you can save $3,900 by selling your home yourself rather than using a real estate…

A: In this question, we are required to determine the future value.

Q: Problem 7-8 Dividend Discount Model (LO2) Rework Table 7.4 for horizon years 1, 2, 3, and 10,…

A: The dividend discount model (DDM) is a numerical tool for estimating a company's stock price. When…

Q: The stock of Business Adventures sells for $50 per share. Its likely dividend payout and end-of-year…

A: Expected return of stock is computed as follows:-Expected return of stock = whereR= return ,P=…

Q: The treasurer of a large corporation wants to invest $12 million in excess short-term cash in a…

A: The bond equivalent yield can be referred to as the yield that has been computed after considering…

Q: Jarett & Sons's common stock currently trades at $22.00 a share. It is expected to pay an annual…

A: Calculate the cost of equity as follows:Cost of equity Therefore, the cost of equity is 10.82%.

Q: 4 ebook Print References Camera 2 costs $5,200. It will also last for eight years and have…

A: The problem case focuses on calculating the present value of cameras and identifying the best camera…

Q: Summit Systems will pay a dividend of $1.52 this year. If you expect Summit's dividend to grow by…

A: The Gordon Growth Model is a financial valuation model used to estimate the price per share of a…

Q: Alpha Company is considering a project with the following cash flows: • Year 0= (14,800) • Year…

A: Payback period is the time required to recover a project or investment's initial cost. It do not…

Q: Staton-Smith Software is a new start-up company and will not pay dividends for the first five years…

A: The Dividend Growth Model is a way of valuing the stock price.Here, the stock price is determined by…

Q: Assuming that the firm's required rate of return is 20%, compute the following: a) Accounting Rate…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: One year ago today you bought 600 shares of Mullen Manufacturing’s common stock for $42.50 per…

A: Dividend Yield: Dividend Yield = (Total Dividends Received / Initial Investment) x 100Capital Gains…

Q: Calculate the present value of the following annuities, assuming each annuity payment is made at the…

A: Using Excel function: =PV(rate,nper,pmt,fv,type)Option 1) =PV(9%/2,3*2,-5600)= 28,884.09Rate= 9%/2 =…

Q: JRN Enterprises just announced that it plans to cut its next-year dividend, D₁, from $2.25 to $1.30…

A: Price of a stock is the present value of the dividend and the growth of the dividend is based on the…

Q: 5. A Loan Amortization can help a Manager take advantage of lower interest rates. T/F 6. IRR can be…

A: True.Loan amortization refers to the process of paying off a loan over a specific period of time…

Q: Since BSOPM was originally developed for a non-dividend paying stock, it is useless for valuing…

A: A popular mathematical method in finance for pricing European-style options is the Black-Scholes…

Q: Better Mousetraps has developed a new trap. It can go into production for an initial investment in…

A: The net present value of the project is the difference between the present value of the cash inflows…

Q: Discuss the importance and purposes of audits in an organisation. Identify the possible Reporting…

A: Audits play a pivotal role in ensuring the reliability and integrity of financial information in…

Q: Halfway There Corp has a profit margin of 4% and an equity multiplier of 1.8. Its sales are $250…

A: In this question, we are required to determine the Return on Equity (ROE).

Q: Find the amount of each payment to be made into a sinking fund earning 7% compounded monthly to…

A: According to the time value of money, a dollar amount in possession is worth more than that must be…

Q: n investment will pay $150 at the end of each of the next 3 years, $300 at the end of Year 4, $600…

A: The value of money at present is known as the present worth of the money while the value of money…

Q: Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. With the help of his…

A: Present Value is the current price of future value which will be received in near future at some…

Q: Which term is used to represent the sales level that results in a project's net income exactly…

A: Cash breakeven is the sales level that results in a project operating cash flow equal to zero.…

Q: Petrol Ibérico. Petrol Ibérico, a European gas company, is borrowing $650,000,000 via a syndicated…

A: Effective Interest Rate:The effective interest rate, also known as the effective annual rate (EAR)…

Q: Aaron Heath is seeking part-time employment while he attends school. He is considering purchasing…

A: Net Present Value is defined as the sum of the present values of all future cash inflows less the…

Q: Problem 4-13 Calculating Growth Rates and Future Values [LO 1, 3] In 1899, the first Green Jacket…

A: Winner prize money in 1899 = $235Winner check in 2020 = $2,670,000

Q: You need to have $31,000 in 5 years. You can earn an annual interest rate of 3 percent for the first…

A: In this question, we are required to determine the amount we need to invest today.

Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Video Video

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: Introduction of future value

VIEW

Step 2: Calculation of the amount of final payment

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

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, finance and related others by exploring similar questions and additional content below.

Similar questions

Value of an Annuity Using the appropriate tables, solve each of the following. Required: 1. Beginning December 31, 2020, 5 equal withdrawals are to be made. Determine the equal annual withdrawals if 30,000 is invested at 10% interest compounded annually on December 31, 2019. 2. Ten payments of 3,000 are due at annual intervals beginning June 30, 2020. What amount will be accepted in cancellation of this series of payments on June 30, 2019, assuming a discount rate of 14% compounded annually? 3. Ten payments of 2,000 are due at annual intervals beginning December 31, 2019. What amount will be accepted in cancellation of this series of payments on January 1, 2019, assuming a discount rate of 12% compounded annually?
Find the future value (FV) of the annuity due. (Round your answer to the nearest cent.) $165 monthly payment, 7% interest, 11 years
Find the periodic withdrawals PMT for the given annuity account. (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $400,000 at 4%, paid out monthly for 15 years i PMT S
ind the amount accumulated FV in the given annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $200 is deposited monthly for 10 years at 6% per year in an account containing $9,000 at the start
Find the amount accumulated FV in the given annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $500 is deposited monthly for 10 years at 4% per year in an account containing $5,000 at the start
Find the future value of the ordinary annuity. (Round your answer to the nearest cent.) $120 monthly payment, 5.25% interest, 1 year $
Find the payment made by the ordinary annuity with the given present value. $82,087, monthly payments for 30 years. Intrest rate is 4% compounded monthly. The payment is $ ? Please simplify your answer. Round to nearest cent as needed
The amount (future value) of an ordinary annuity is given. Find the periodic payment. (Round your final answer to two decimal places.) A = $18,500, and the annuity earns 6% annual interest compounded monthly for 10 years.
Find the amount accumulated FV in the given annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $550 is deposited monthly for 13 years at 5% per year
Find the periodic withdrawals PMT for the given annuity account. (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $400,000 at 6%, paid out monthly for 18 years
ecalculate the future value (in $) of the ordinary annuity. (Round your answer to the nearest cent.) Nominal Annuity Payment Time Future Value Payment Frequency Interest Period (years) Rate (%) Compounded of the Annuity $4,500 every 6 months 4 semiannually
In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period.Find the accumulated amount of the annuity. (Round your answer to the nearest cent.) $1000 monthly at 6.6% for 20 years.