Determine the present value of payments of $100 at the end of each month for 20 years. Use a discount rate (interest rate) of 6% compounded monthly. (Do not round Intermedlate calculatlons and round your final answer to 2 declmal places.) Present value $.

Determine the present value of payments of $100 at the end of each month for 20 years. Use a discount rate (interest rate) of 6% compounded monthly. (Do not round Intermedlate calculatlons and round your final answer to 2 declmal places.) Present value $.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 5P

See similar textbooks

Related questions

Q: The central issue of efficient market concens: O regulations O structure O participants O informatio...

A: Market efficiency is the ability of markets to process the information quickly and generate the unbi...

Q: Inflation, recession, and high interest rates are economic events which are characterized as: A. Com...

A: Risk is defined as the term in which is the chance that actual returns differ from what is expected ...

Q: A major property developer is concerned about lack of sales due to local economic conditions. To ens...

A: The effective annual rate of interest is the interest rate actually earned on the amount of loan or ...

Q: 5.7. Projects A through E are being considered by an investor. They all are ten-year projects and th...

A: Capital rationing is a concept that refers to analyzing the present value of inflows and outflows to...

Q: 33. Nonconstant Growth. Better Mousetraps has come out with an improved product, and the world is be...

A: The current stock price is derived as the discounted value of future cash flows associated with the ...

Q: Calculate the amount of the required monthly payment. (D. whole dollar amount.)

A: Monthly Payment: It is the payment made by the borrower to the lender for taking a loan. These paym...

Q: What is the monthly payment on a loan of $5,000 at APR = 8% for one year.

A: Loan amount (LV) = $5000 Interest rate = 8% Monthly interest rate (i) = 8%/12 = 0.666666666666667% N...

Q: What is the WACC for Arnold and Rodgers, a law firm using 65% equity with a required return of 15%, ...

A: WACC = [Cost of debt x (1 - tax rate) x Weight of debt] + (Cost of preferred stock x Weight of prefe...

Q: Aunt May Inc.'s business is booming. and it needs to raise more capital. The company purchases suppl...

A: When the effects of compounding over time are considered, an effective annual interest rate is the t...

Q: Wolseley manufacturing Co. invests in a group of risky projects, which increases the unsystematic ri...

A: We know, as per Capital Asset Pricing Model (CAPM), Re= Rf + [ (Rm - Rf) x Beta ] where, Re= cost o...

Q: Clayton Moore's Money Fund. Clayton Moore is the manager of an intemational money market fund manage...

A: Here,

Q: After moving to Boston, Massachusetts, USA, Larry Winters borrowed $1,000,000 for a thirty year mort...

A: Amount borrowed (A) = $1,000,000 n = 30 years = 360 months r = 3.3% per annum = 0.275% per month Let...

Q: Discuss the economic benefits for both. Briefly explain your understanding of an IPO, the net valuat...

A: The process of issuing shares of a private firm to the public in a fresh stock issuance is known as ...

Q: Alpha Ltd wishes to know its overall cost of capital and the management has come to you for assistan...

A: i) Dividend (D) = Sh 5 Share price (P) = Sh 87

Q: Avicorp has a $11.7 million debt issue outstanding, with a 5.8% coupon rate. The debt has semi-annua...

A: Debt refers to the amount borrowed by a firm to finance its operations. It forms part of the long-te...

Q: Find the amount of money owed at the end of 3 years if $7,500 is borrowed at 5.5% per year compounde...

A: Loan amount (PV) = $7500 Interest rate = 5.5% Quarterly interest rate (r) = 5.5%/4 = 1.375% Period =...

Q: - 42. Abby C. Dee borrowed P10,620.00 from Jakey L. Em on October 30, 2020 simple interest rate. How...

A: Amount borrowed (X) = P 10620 n = 4 months r = 8% He needed to pay at the end of Feb 2021, but paid ...

Q: Explain how wrong calculation of the cost of capital of a project leads to incorrect choice of a pro...

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only on...

Q: Find the present value of an annuity of P 30,000 payable annually for 10 years

A: Present Value of Annuity: It is the present worth of the future annual cash flow stream and is calc...

Q: Question 5 3. 1 3 4 EOY 6. 7 8. 9. 10 20 21 22 23 24 25 26 27 28 29 30 CF $300 A2 Аз A4 As Five depo...

A: This can be considered as a case of decreasing annuity in which the annuity amount is declining by 1...

Q: 3.A brand new car is worth Php1,500,000 is payable in 60 months but if paid within 30months it will ...

A: Here, Car amount = Php 1,500,000 Time = 60 months Discount = 3% To Find: Rate of interest =?

Q: The cost of supplies for a 10-year project increases by P900 every year, starting at the end of the ...

A: We should ascertain the cash flows for the next 10 years and then should compute its present value t...

Q: A 58-65-68 asymmetric butterfly spread is constructed using a total of 20 three-month call options. ...

A: An asymmetric butterfly spread involves buying the lowest and highest price calls and selling the ca...

Q: A bond payable in a currency different from that of the country in which it is issued is known as a

A: Junk Bond: It refers to the bond that has a low credit rating given by the rating agency. The ratin...

Q: Assume that the risk-free rate is 6.00% and the market risk premium is 6.75%. What is the expected ...

A: Given: Risk free rate=6% Market risk premium = 6.75%

Q: In five years, P18,000 will be needed to pay for a building renovation. In order to generate this su...

A: Annuity refers to equal payments made in a fund at regular intervals. The amount so deposited genera...

Q: Cloud Venture has a line of credit with a local bank of $75,000. The loan agreement calls for intere...

A: Information provided: Line of credit = $75000 Interest “r” = 6% Compensating balance = 3% Amount to...

Q: 7. Calculating the Number of Periods it take to double your money? To quadruple it? At 5.3 percent i...

A: Years = ln(Future value / Present value) / ln(1 + Rate) Double your money: Years = ln(2 / $1) / ln 1...

Q: 4. If you pawned your jewelry at Php 50,000 for 75 days at 8% per annum simple interest.How much wil...

A: We know, in simple interest method Future value = Principal amount + Interest earned where interest ...

Q: Sharon Bohnette owns 1,300 shares of Northern Chime Company. There are six seats on the board of dir...

A: Voting for the seats on the board of directors can be done using the traditional method or the cumul...

Q: The manager of Cougar Fund needs to withdraw $35,000 seven years from today. If her account earns 7 ...

A: Amount to be deposited today will be present value of amount required after 7 years. The present val...

Q: You deposit $4000 each year into an account earning 4% interest compounded annually. How much will y...

A: Future value of annuity = Annual payment x [(1 + i)n - 1]/i i = Interest rate n = number of years

Q: Question 5 A company had the following balance sheet as on 31 March, 2021: Lisbilities Pin Crores As...

Q: An investment of $600,000 is made in equipment that qualifies as 3-year equipment for MACRS-GDS depr...

A: To calculate the Net Present Value, the rate to be used will be the nominal rate, which will be calc...

Q: EURUSD is trading at 1.0850, US 3 month interest rates are 1.25% whilst Euro 3 month rates are 2.25%...

A: Given: Interest Rate of Euro = 2.25% Interest Rate of USD = 1.25% Spot Rate = Euro/USD = 1.0850 Peri...

Q: Find the present worth of perpetuity of P 20,000 payable quarterly if money is worth 10% compounded ...

A: Quarterly payment (P) = P 20,000 Interest rate = 10% Quarterly interest rate (r) = [{1+(0.10/12)}12]...

Q: YYYYMM Return(Stk1) Return(Stk2) Return(Market) Return(T-bill) 201701 7.75% 3.00% 6.18% 0.20% 201702...

A: The difference between the expected return by CAPM (capital asset pricing model) and the expected re...

Q: XYZ makes an electric skateboard-like scooter that is small enough to fit into a school locker. Pro...

Q: Peter makes a deposit at the end of every month into a savings account that earns interest at 5.4% c...

A: There is need of proper financial planning for the future needs and there is need proper savings nee...

Q: The Philippine Association of Board Examiners (PABE) desires to award a P1,600 scholarship annually ...

A: To determine up to which year scholarship can be awarded, it is required to calculate the interest e...

Q: 29. Nonconstant Growth. Tattletale News Corp. has been growing at a rate of 20% per year, and you ex...

A: Here we will use the dividend discount model to find the answers.

Q: Which is a better choice in buying a washing machine worth ₱12,700.00? A. Avail of the instalment p...

A: From all options, let's find the interest charged. For option A, n = 18 months Monthly payment (M) =...

Q: Brian Baluya was a subscriber of Global Appliance Corporation for 300 ordinary shares at P150 par va...

A: Since multiple subpart questions are asked , we will solve 1st sub 3 parts for you as per prescribed...

Q: What are the disadvantages of the financial intermediaries and the negative ways they can impact the...

A: A financial intermediary is that entity that acts as a middleman in a financial transaction taking p...

Q: What's the market price for a $100,000 Par, 3.25% Coupon bond with 18 years to maturity that is yiel...

A: Given, Par value of bond $100,000 Coupon rate is 3.25% term to maturity is 18 years YTM 1.79%

Q: What is the effect of cashless society to finance system?

A: The financial system is the most important factor in economic transformation. Finance helps bridge t...

Q: US 3 month interest rates are 1.5% whilst Hungarian 3 month rates are 4.5% (both quoted using standa...

A: Exchange rate (ER) is a value at which two or more currencies are exchanged and traded. Rate at whic...

Q: 39. The discount on one unit negotiable substance in one unit of time. rate of interest present wort...

A: Since multiple questions are asked , we will answer 1st question as per prescribed guidelines. T...

Q: 8. Bond Pricing. A 6-year Circular File bond with face value $1,000 pays interest once a year of $80...

A: Coupon rate means the coupon payments as a percentage of the face value of bonds, whereas yield to m...

Q: explain why financial management is a difficult task within an organisation, and give examples as we...

A: For any company or organization financial management remains one of the most important and vital act...

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

Determine the present value of payments of $100 at the end of each month for 20 years. Use a discount rate (interest rate) of 6%
compounded monthly. (Do not round Intermedlate calculatlons and round your final answer to 2 declmal places.)
Present value
$
ences

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

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

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

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Next Level Potter wishes to deposit a sum that at 12% interest, compounded semiannually, will permit 2 withdrawals: 40,000 at the end of 4 years and 50,000 at the end of 10 years. Analyze the problem to determine the required deposit, stating the procedure to follow and the tables to use in developing the solution.
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.) $200,000 at 6%, paid out monthly for 11 years PMT = $ Need Help? Read It Watch It
Find the future value of an annuity due of $1000 paid at the beginning of each 6-month period for 7 years if the interest rate is 4%, compounded semiannually. (Round your answer to the nearest cent.) Need Help? Read It
Find the value of the annuity at the end of the indicated number of years. ASsume that the interest is compounded with the same frequency as the deposits. (Round your answer to the nearest cent.) $4 Amount of Deposie Frequency Rate Time m n $1,250 quarterly 7% 15 yr Need Help? Read It
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.) $200 is deposited monthly for 10 years at 6% per year in an account containing $9,000 at the start FV = $ 49150 Need Help? Read It Watch It Submit Answer
Find the present value of an annuity of $6000 paid at the end of each 6-month period for 6 years if the interest rate is 5%, compounded semiannually. (Round your answer to the nearest cent.)$_____
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.) $300,000 at 2%, paid out monthly for 10 years
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
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 5%, paid out monthly for 20 years, leaving $10,000 in the account after the 20 years
Compute the present value of a perpetuity that pays $6,744 annually given a required rate of return of 9 percent per annum. Round your answer to 2 decimal places; record your answer without commas and without a dollar sign. Answer Question 4 Assume that you deposit $3,956 each year for the next 15 years into an account that pays 20 percent per annum. The first deposit will occur one year from today (that is, at t = 1) and the last deposit will occur 15 years from today (that is, at t = 15). How much money will be in the account 15 years from today? Round your answer to 2 decimal places; record your answer without commas and without a dollar sign.
If you borrow $5,300 at $900 interest for one year, what is your annual interest cost for the following payment plan? (Round the final answers to 2 decimal places.) Effective rate a. Annual payment % b. Semiannual payments % c. Quarterly payments % d. Monthly payments %