Give typing answer with explanation and conclusion A deposit of $450 earns the following interest rates: 9 percent in the first year. 7 percent in the second year. 6 percent in the third year. What would be the third year future value?

Give typing answer with explanation and conclusion A deposit of $450 earns the following interest rates: 9 percent in the first year. 7 percent in the second year. 6 percent in the third year. What would be the third year future value?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

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

See similar textbooks

Related questions

Q: Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 60 shares with a…

A: Data given:Bonnie owns 60 shares with a basis of $2600Clyde owns 40 shares with a basis of $12500

Q: Roak Company and Clay Company are similar firms that operate in the same industry. Clay began…

A: Profit margin is net income divided by net sales. Hence, a company with higher profit margin is more…

Q: A real estate investment has the following expected cash flows: Year…

A: The PV of the investment refers to the total value of its cash flows at present after they have been…

Q: C.a.p.i.t.a.l. .S.t.r.u.c.t.u.r.e.:. .S.t.o.c.k. .V.a.l.u.a.t.i.o.n C.o.m.m.o.n. .S.t.o.c.k.…

A: Capital Structure: Stock ValuationCapital structure refers to the way a company finances its…

Q: A store offers its salespeople a table with coefficients to be applied to the cash sale value of its…

A: Present value is the current value of a future stream of cash flows, considering the time value of…

Q: A firm has issued $25 million in long-term bonds that now have 8 years remaining until maturity. The…

A: Capital structure is one of the useful concept being used in business. This shows out of total…

Q: Use the MIRR decision rule to evaluate this project. (Do not round intermediate calculations and…

A: MIRR stands for Modified Internal Rate of Return. It determines the return of the project taking…

Q: Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of…

A: Net present value and internal rate of return are the modern methods of capital budgeting that are…

Q: e Fourth Corp. is evaluating extra cash dividends versus share repurchases. In either case, $6,675…

A: Some time when company have extra cash than company pay dividends or may repurchase own shares from…

Q: The same call option cost if the volatility was reduced to 10.500% when the spot rate fell to…

A: Using BSOPM, we can determine the price of the call option. A call option gives the right but not…

Q: What is credit default swap and why is it useful financial product

A: A credit default swap (CDS) is a financial derivative instrument that allows investors to hedge…

Q: WHAT ARE THE WAYS OF SUSTAINABLY FUNDING THE POOR?

A: Sustainably funding initiatives aimed at supporting the poor requires a multifaceted approach that…

Q: Required: Using the Fama and French 3-factor model, calculate the coefficient on MKTRF for hedge…

A: The coefficient of MKTRF is the beta of MKTRF. We can determine the beta using the excel function…

Q: A friend has started a business. His product is a great success and the firm quickly grows large…

A: The share price discounted cash flows method involves projecting a company's future cash flows and…

Q: (Solving for n with non-annual periods) Approximately how many years would it take for an investment…

A: The time value of money is a fundamental concept in finance that recognizes the principle that money…

Q: Chelsea Fashions recently paid an annual dividend of $1.20 per share. The estimated dividend growth…

A: When the company receives profits and distributes them among the shareholders. That share of profit…

Q: Here are the cash flows for a project under consideration: C0 C1 C2 −$ 7,660 +$ 5,600 +$ 19,440 a.…

A: Cash flow in year 0 = c0 = -$7660Cash flow in year 1 = c1 = $5600Cash flow in year 2 = c2 = $19,440

Q: Answer this question based on the dividend growth model. If you expect the required rate of return…

A: The required rate of return represents the minimum return an investor will seek for taking on the…

Q: Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the…

A: An option refers to a derivative instrument that provides its holder the choice of purchasing or…

Q: The time between the acquisition of inventory and the collection of cash from receivables is called…

A: Options given are:Cash cycleOperating cycleAccounts receivable periodInventory period

Q: The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a…

A: Price-Weighted Index:In the price-weighted index, each security is weighted by the relevant price…

Q: Could you use formulas in order to get those answers, like the images I have attached to this…

A: Capital budgeting is the process through which a company evaluates and selects long-term investment…

Q: Nguyen Inc. is considering the purchase of a new computer system (ICX) for $140,000. The system will…

A: Annual cash flows represent the amount of cash a firm can produce yearly from its normal business…

Q: a. A single-stock futures contract on a non-dividend-paying stock with current price $260 has a…

A: Future price is basically the stock price and the risk-free return generated on it.Formula for…

Q: Novak Inc. now has the following two projects available: Project 1 2 Initial CF -11,659.64 -3,369.54…

A: The NPV of a project refers to the profitability of the project by discounting cash flows to find if…

Q: Robert Finley wishes to become a millionaire. His money market fund has a balance of $111,780 and…

A: To calculate the number of years Robert must leave his money in the fund to reach his desired…

Q: Sprint Inc. expects the following: UCFBT=$ 10 million in perpetuity from the end of year 1. Debt=…

A: Data given: UCFBT=$ 10 million in perpetuity from the end of year 1. Debt= $ 20 millionRb =5% Tax…

Q: Assume that all interest is simple interest. Fred started a new e-Commerce business and borrowed…

A: Given data:> Time (T) = 10 years .> Interest (I) = 4440> Price (P)= $ 14800> Rate(R) =?

Q: Matt plans to start his own business once he graduates from college. He plans to save $1,700 every…

A: Future value is the value of all payments accumulated or annuity paid at future date with interest…

Q: ewly issued bond pays its coupons once a year. Its coupon rate is 4.3%, its maturity is 10 years,…

A: Tax on capital gain is calculated as shown below. Tax on coupon or interest income is…

Q: Consider the following bonds: (Click on the following icon in order to copy its contents into a…

A: Here,BondCoupon rateMaturity (years)Yield to maturityFace value of the bondYield to…

Q: Yeadon Construction's stock is expected to earn 5 percent in a weak economy, 12 percent in a normal…

A: Expected rate of return=Respective return*Respective Probability

Q: Atita plans to gift $150,000 to her daughters as a gift in the future. She thinks it will help her…

A: The time value of money is a fundamental concept in finance that recognizes the idea that the value…

Q: Islander Corporation's common stock will pay a dividend of $3.50 one year from now. The annual…

A: Current price refers to the present value of the future cash payment that is helpful in deciding…

Q: The certainty equivalent method Choice 1 of 4:increases the valuation relative to the standard…

A: Certainty Equivalent ,the amount that is guaranteed cash that the person will accept instead of…

Q: If the annual volatility of a stock's annual returns is 35% per year and if the stock has a price of…

A: Annual volatility refers to the measure of price fluctuations or variability in the annual returns…

Q: From the following information calculate the net present value of the two projects and suggest which…

A: First, we need to determine the net cash flow using the formula below:Net cash flow = cash flow +…

Q: Deep Mines has 43,800 shares of common stock outstanding with a beta of 1.54 and a market price of…

A: Beta = b = 1.54Market return = rm = 7.5%Risk free rate = t bill yield = rf = 3.6%

Q: A company paid $111 per share in dividend this year, the company expects to grow at the rate of 12%…

A: The intrinsic value of a stock is found out by computing the present value of dividend stream.

Q: Assume that you wish to purchase a bond with a 17-year maturity, an annual coupon rate of 11.5%, a…

A: > Given data> Rate = 9.5% / 2 = 4.75%> Number of periods (Nper ) = 17*2 = 34> Payment…

Q: Suppose the value of the S&P 500 stock index is currently 2,400. a. If the 1-year T-bill rate is 6%…

A: Futures price is the spot price plus the risk-free return on it. If the underlying asset has…

Q: Passive investors are evaluated based on their ability to outperform a target index. Is it trueor…

A: First, let us define passive investing.Passive investing is when an investor maximizes return by…

Q: Wellington Jumbo Crab's stock currently sells for $100 per share. Last week the firm issued rights…

A: Given:Stock price = $100 per shareSubscription price = $20 per shareNumber of rights = 3

Q: Given the annual interest rate and a line of an amortization schedule for that loan, complete the…

A: Loan amortization is the process of paying off a debt, over a set period of time through a series…

Q: Assuming Nifty trades at Rs. 17,200 on 18.02.2022. Your client enters a long straddle by buying a…

A: 1. Call option - call option provides the holder of the option , the right and not the obligation to…

Q: Suppose that the risk-free interest rate is 12% per annum with continuous compounding and a stock…

A: First, let's calculate the present value of the expected dividends:PV(dividends) = 1/(1+0.123/12) +…

Q: A stock's returns have the following distribution: Demand for the Company's Products Probability of…

A: In the given case, we have provided the risk-free rate , probability of each state of economy and…

Q: Find the duration of a bond with settlement date June 13, 2018, and maturity date December 19, 2027.…

A: Bond duration is a measure of the sensitivity of a bond's price to changes in interest rates. It…

Q: Given: Firm A is all-equity financed and has total assets of $200 million. Firm B is an identical…

A: In the financial statement interest of debt obligation is deducted from EBIT in order to arrive at…

Q: You just turned 22 years old and want to retire when you turn 65. You plan to put $4,000 every year…

A: Here,ParticularsValuesAge at the time of beginning22.00Age at the time of retirement65.00Annual…

Concept explainers

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.

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: Concept and formula.

VIEW

Step 2: Computation of future value at then end of 3rd year.

VIEW

Solution

VIEW

Step by step

Solved in 3 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

A deposit of $250 earns the following interest rates: 10 percent in the first year. 8 percent in the second year. 7 percent in the third year. What would be the third year future value? (Round your answer to 2 decimal places.)
A deposit of $750 earns interest rates of 9 percent in the first year and 12 percent in the second year What would be the second year future value?
A deposit of $290 earns the following interest rates: 9 percent in the first year. 7 percent in the second year. 6 percent in the third year. What would be the third year future value?
Derive an equation to find the end-of-year future sum F that is equivalent to a series of n beginning-of-year payments B at interest rate i. Then use the equation to determine the future sum F equivalent to six B payments of $100 at 8% interest.
Compounding with Different Interest Rates A deposit of $460 earns interest rates of 8.6 percent in the first year and 10.6 percent in the second year. What would be the second year future value?
What is the present value of a cash payment of $1.2 that you will receive in 5.3 years if the interest rate is 6.5%? Round to 2 decimal places. Include dollar signs ($) and percents (%) as appropriate.
If you deposit $P into a savings account that earns interest at a rate of i% per month for n years, the future worth in year n is represented by all of the following equations, except: (a) F = $P(F∕P, effective i/month, 12n) (b) F = $P(F∕P, effective i/quarter, 3n) (c) F = $P(F∕P, effective i/6-month, 2n) (d) F = $P(F∕P, effective i/year, n)
What is the value of the continuously compounded nominal interest rate r if the present value of 104 to be recieved after one year is the same as the present value of 110 to be received after two years? Please solve by hand and show all the steps of answer in order me to understand it at best :)
If the present value of $400 paid one year from now is $320, what is the one-year interest rate? (Note: this number is also known as the discount rate.)
For the follwing case, determine the number of years it wll take for the intitial deposit to grow to equal the future amount the given interest rate. Initial Deposit Future Amount Interest Rate $9,998 $18,400 17%
If the compounded interest rate on 75 days time deposit is %16, calculate the simple rate?
(Computation of Future Values and Present Values) Using the appropriate interest table, answer the following questions. (Each case is independent of the others.) What is the future value of 20 periodic payments of $4,000 each made at the beginning of each period and compounded at 8%? What is the present value of $2,500 to be received at the beginning of each of 30 periods, discounted at 5% compound interest? What is the future value of 15 deposits of $2,000 each made at the beginning of each period and compounded at 10%? (Future value as of the end of the fifteenth period.) What is the present value of six receipts of $1,000 each received at the beginning of each period, discounted at 9% compounded interest?