Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?

Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PA: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

See similar textbooks

Related questions

Q: An investor have a projected surplus income of P1000 per year which he plans to place in a bank…

A: Periodic Payment = P 1,000 Interest Rate = 18% Time Period = 5 Years

Q: You plan to borrow $1000 from a bank. In exchange fro $1000 today, you promise to pay $1080 in one…

A: Given: The amount that is planned to borrow today is $ 1000 The amount that is to be paid after one…

Q: You plan to use the 150,000 TL fund, which was idle for a year, in a time deposit account. The…

A: The future value is the future worth of the mount that will be paid or received at the end of the…

Q: Use the present value and future value tables to answer the following questions. A. If you would…

A: Since you have posted question with multiple sub parts, we shall be solving first three sub-parts…

Q: In wisely planning for your retirement, you invest $12,000 per year for 20 years into a 401-k…

A: Calculation of Annual withdrawal amount after retirement is shown below: Hence, the withdrawal…

Q: f you wish to save $875,000 in three years, how much would you need to deposit at the start of each…

A: Principal amount invested to save $ 875000 is $ $ 744,941 so to start depositing at the beginning of…

Q: You will deposit $30,000 per year into an account beginning today that pays 13 percent per year.…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: mall financial analyst, you have been selected by a client to provide assistance in the following…

A: Future value of annuity includes the interest accumulated and amount being deposited over the period…

Q: The following cash flow diagram indicates the yearly payments you will make in the future. Assume…

A: The Present Value of money: The value of a cash stream to be received or paid at some time in the…

Q: How much do you have to deposit today so that beginning 11 years from now you can withdraw $15,000…

A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: Assuming that your Mother wishes to make annual deposits into your younger brother's savings…

A: Present Value of the gradient “G” 400 for 4 years and present Value of “A” $2000 for 4 years is the…

Q: If you deposit the money in the bank, how much will you have in one year?

A: The time value of money implies that the cash in hand at present has a higher value than the cash…

Q: The following cash flow diagram indicates the monthly payments you will have in the future. Assume…

A: Interest Rate = 12%/12 = 1% per month Payments: Month Payment 18 2000 19 2400…

Q: Suppose someone needs dollars 8969 in his account 5 years from now and the required rate of return…

A: Amount - 8969 Time - 5 years Rate of return - 0.1 per year compounded continuously

Q: If you are planning a trip to other place after 3 years. And, if you intend to deposit savings of…

A: According to the time value principle, a sum of money may have different purchasing powers in…

Q: What rate of return would be needed for that prediction to come true?

A: Rate of Return: It is the net profit or loss made by an investment over a certain period. It is…

Q: Imagine that you are a professional personal financial planner. One of your clients asks you the…

A: Annual Interest (r) = 5% Part A Annual Saving = 3,700,000 Time Period (N) = 15 years Future Value =…

Q: After a number of years of saving up all your pennies you have finally reached a total amount of…

A: Investors shall open a savings account in such a bank that will pay more interest rates on an…

Q: You have just completed your bachelor’s degree in business and applied for a job with a local bank.…

A: Hi, since you have posted multiple questions, I will answer only the first one as per our…

Q: What is the excel function and formula for this question? Off-The-Books Investment Firm, LLC, has…

A: The return which is determined in terms of percentage which is expected to be earned on investment…

Q: At the end of each of the next 5 years, you will deposit the following amount into your savings…

A: Compounding the present value provides future value

Q: Calculating present and future values Use future or present value techniques to solve the following…

A: As per Bartleby answering policy answered only the first question. Kindly post the other questions…

Q: An example of how to calculate net present value is done using the following. Imagine you have been…

A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…

Q: Your finance advisor offers you an investment that promise $200000 in 15 years from now. He said…

A: INFORMATION: A. YEARS 15 PMT (MONTHLY DEPOSIT) 0 PRESENT VALUE $45,000 FUTURE…

Q: How much would be in your savings account in 8 years after depositing $300 today if the bank pays 8…

A: Present value = Future value/(1+required rate of return)^n. Use PV Function in excel Future value =…

Q: Suppose you want to save $220,000 for retirement. You will do so by putting monthly deposits into an…

A: Retirement planning involves the set of activities that determines the income goals that an…

Q: Calculate how much will Sonja have in a savings account 12 years from now if she deposits RM 3,000…

A: Given in the question: Rate of Interest 10% Period 12 Years Initial Deposit…

Q: As an investment plan, a bank offers you an attractive plan so that you could get RM 100,000.00…

A: The concept of the time value of money states that the current worth of money is more than its value…

Q: Use the present value and future value tables to answer the following questions. A. If you would…

A: Future value = Present value * ( 1 + Ineterest rate )n

Q: Zachary Porter of Abilene, Texas, is contemplating borrowing $10,000 from his bank. The bank could…

A: The question gives the following information:

Q: You are depositing $3,000 today in an account with an expected rate of return of 10%. If you deposit…

A: Future value can be defined as the worth of money at a future date, computed in accordance with the…

Q: Compute how much shall the investor collect at the end of 13 years

A: Future value: It is the future worth of the present amount or cashflows, compounded over a period…

Q: You have been depositing money into an account yearly based on the following investment amounts,…

A: The FV (future value) of the investments is calculated as per the time period, rate, and amount of…

Q: You are considering in a security that has the following cash flow pattern. At the end of year 5,…

A: The time value of money is the idea that the value of money received today will be more worthy than…

Q: now now to use financial calo to soive (Complex present value) How much do you have to deposit today…

A: In this we have to calculate amount required at end of 15 years and calculate today value of that.

Q: Use the savings plan formula to answer the following question You put $300 per month in an…

A: Future value of investment can be calculated as: = Annuity payment* Future value Annuity Factor…

Q: A person is preparing for his retirement and placed 50,000 Php in a time deposit with 6.5% interest…

A: Value of investment 50,000 Time of investment Now Annual Interest Rate 6.50% Compounding…

Q: You are considering a safe investment opportunity that requires a $710 investment today, and will…

A: Minimum acceptable rate of return It is the lowest rate of return which a project must be…

Q: Use the future value of an annuity due formula to calculate how much (in $) you would have in the…

A: In this question, if the amount is deposit at the beginning of the year then the period we will use…

Q: Suppose you decide to save P3,000 per month for the next three years. If you invest all of these…

A: Here, Equal amount at equal interval (A) = P3,000 per month Time period in years (n)= 3 years Rate…

Q: Having P10,000 to invest and do not want to take any risk, it will put the funds in a savings…

A: Let us assume the interest rate (i) is 10% = 0.10 Principal Amount (P) = P10,000 Time, t = 3 years…

Q: ulate the present value of each cashflow using a discount rate of 7%. Which do you prefer me w and…

A: Present value is value of money today considering the interest and period of time that is to be…

Question

Please advise on these time value of money practice problems. How would you solve these using a financial calculator? What values would you enter for N, I/YR, PV, PMT, and FV ?

a) Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate.

b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%.

c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Computation of present value

VIEW

Computation of future value

VIEW

Computation of present value with annual receipts

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Money Management and Achieving Financial Goals

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

One can solve for payments (PMT), periods (N), and interest rates (1) for annuities. The easiest way to solve for these variables is with a financial calculator or a spreadsheet. Quantitative Problem 1: You plan to deposit $2,100 per year for 4 years into a money market account with an annual return of 3%. You plan to make your first deposit one year from today. a. What amount will be in your account at the end of 4 years? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. Assume that your deposits will begin today. What amount will be in your account after 4 years? Do not round intermediate calculations. Round your answer to the nearest cent. $ Quantitative Problem 2: You and your wife are making plans for retirement. You plan on living 25 years after you retire and would like to have $95,000 annually on which to live. Your first withdrawal will be made one year after you retire and you anticipate that your retirement account will earn 12% annually. a.…
Please provide the steps to solving this problem using a financial calculator: You just opened a brokerage account, depositing $3,500. You expect the account to earn an interest rate of 9.652%. You also plan on depositing $4,500 at the end of years 5 through 10. What will be the value of the account at the end of 20 years, assuming you earn your expected rate of return?
Use the present value and future value tables to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? $fill in the blank 1 B. If you place $6,100 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? $fill in the blank 2 C. You invest $7,000 per year for 9 years at 12% interest, how much will you have at the end of 9 years? $fill in the blank 3 D. You win the lottery and can either receive $760,000 as a lump sum or $40,000 per year for 19 years. Assuming you can earn 8% interest, which do you recommend and why?
For the following economic calculations, write the factors (multipliers) that should be used,in (i) using the parameter values, and in (ii) calculate the result by showing your computations. Write the results you find in the spaces left. (Use factors for your calculations.)EXAMPLE: If you deposit $ 100 to a bank account that earns 8% annual interest, how much money will you have in this account after five years?(i)(F/P, 8%, 5) (ii)146.93100 * (F/P, 8%, 5) = 100 * 1.4693 = 146.93 TLa. You plan to take a credit with $1500 installment size per year with an annual interest rate of 8% over six years from a bank. What is the amount of your current credit?(i) (ii)b. A bank is required to deposit money for four years with an interest rate 10%. The money deposited at the end of the first year is 6000 TL and the amount of money deposited in the next three years will be reduced by 500 TL every year. How much money will be in the bank at the end of the fourth year?(i) (ii)
Use the present value and future value tables to answer the following questions. A. If you would like to accumulate $2,600 over the next 5 years when the interest rate is 15%, how much do you need to deposit in the account? $fill in the blank 1 B. If you place $6,300 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? $fill in the blank 2 C. You invest $7,000 per year for 11 years at 12% interest, how much will you have at the end of 11 years? $fill in the blank 3 D. You win the lottery and can either receive $740,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why? Take the lump sum $740,000 because it is more money.
In this project, you will use a graphing calculator to compare savings plans. For instance, suppose you are depositing $1000 in a savings account and are given the following options: 4 • 6.2% annual interest rate, compounded annually 6.1% annual interest rate, compounded quarterly 6.0% annual interest rate, compounded continuously •
What is the excel function and formula for this question? Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000 in 2 years. To get in, you'll need to make a $10,000 deposit to their receivables account and promise not to tell anyone about it. What is the annual return on this investment?
You plan to use the 150,000 TL fund, which was idle for a year, in a time deposit account. The annual interest rate offers you receive from traditional and digital banks are as follows. Accordingly, calculate which option will give you the highest rate of return.
Use the present value and future value tables to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the Interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 6 years with a 12% Interest rate? C. You Invest $9,000 per year for 9 years at 12% Interest, how much will you have at the end of 9 years? D. You win the lottery and can either recelve $750,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 8% Interest, which do you recommend and why? Take the lump sum $750,000 because it is more money. ✓
d. If, instead, you decide to withdraw $170000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings? (Use trial-and-error, a financial calculator: solve for "N", or Excel: function NPER) e. Assuming the most you can afford to save is $1500 per year, but you want to retire with 1000000 in your investment account, how high of a return do you need to earn on your investments? (Use trial-and-error, a financial calculator: solve for the interest rate, or Excel: function RATE) *round to two decimal places for d) and e)*
If an investor invests her money in a project with a 10% annual return. What is her nominal rate of return after two years. What is her effective rate of return after two years.1) Do the calculations manually then check them using an online financial calculator. You may also use financial software. 2) In your deliverable, you need to describe the tool you used
Answer the given question with a proper explanation and step-by-step solution. Please provide the answer using the math tool otherwise I give the downvote. Financial Mathematics Please answer all parts of the question Suppose you will receive $50,000 in 10 years time.a) What is the discount factor assuming quarterly compounding at 7% interest rate?b) What is the present value?c) What happens to the present value if the payment was to occur in five years?d) What happens to the present value if the interest rate was 8% instead?