Karen White, a lottery winner, will receive the following payments over the next seven years. She has been approached by an investor who will pay her a lump sum today for the rights to those future cash flows. If she can invest her cash flows in a fund that will earn 10.70 percent annually, how much should Karen require the investor to pay for the cash flows? (Round answer to 2 decimal places, e.g. 15.25. Do not round factor values.) 0 2 3 + + $326,000 $376,000 $401,000 $426,000 $476,000 $526,000 $676,000 1 4 Present value of investment $ 5 6 + 7 Year

Karen White, a lottery winner, will receive the following payments over the next seven years. She has been approached by an investor who will pay her a lump sum today for the rights to those future cash flows. If she can invest her cash flows in a fund that will earn 10.70 percent annually, how much should Karen require the investor to pay for the cash flows? (Round answer to 2 decimal places, e.g. 15.25. Do not round factor values.) 0 2 3 + + $326,000 $376,000 $401,000 $426,000 $476,000 $526,000 $676,000 1 4 Present value of investment $ 5 6 + 7 Year

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Jennifer Davis is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $28,000 for the down payment. If Jennifer can invest in a fund that pays 7.0 percent annual interest, compounded quarterly, how much will she have to invest today to have enough money for the down payment? (Round intermediate calculations to 6 decimal places, e.g. 2.512512 and final answer to 2 decimal places, e.g. 2,515.25.) Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Amount to be invested today
Serena Monroe wants to create a fund today that will enable her to withdraw $31,300 per year for 8 years, with the first withdrawal to take place 5 years from today. Click here to view factor tables. If the fund earns 11% interest, how much must Serena invest today? (Round factor values to 5 decimal places, eg. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Investment amount $
Julia Monroe wants to create a fund today that will enable her to withdraw $27,700 per year for 8 years, with the first withdrawal to take place 5 years from today. Click here to view factor tables. If the fund earns 10% interest, how much must Julia invest today? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Investment amount $
Candice Monroe wants to create a fund today that will enable her to withdraw $28,500 per year for 8 years, with the first withdrawal to take place 5 years from today. Click here to view factor tables. If the fund earns 9% interest, how much must Candice invest today? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, eg. 458,581.) Investment amount $
Consider the following independent situations. a. Mike Finley wishes to become a millionaire. His money market fund has a balance of $92,296 and has a guaranteed interest rate of 10%. How many years must Mike leave that balance in the fund in order to get his desired $1,000,000? b. Assume that Sally Williams desires to accumulate $1 million in 15 years using her money market fund balance of $182,696. At what interest rate must Sally’s investment compound annually?
Rita Gonzales won the $41 million lottery. She is to receive $1.5 million a year for the next 19 years plus an additional lump sum payment of $12.5 million after 19 years. The discount rate is 14 percent. What is the current value of her winnings? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Mary is going to receive a 33-year annuity of $9,800. Nancy is going to receive a perpetuity of $9,800. If the appropriate interest rate is 11 percent, how much more is Nancy’s cash flow worth? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Sally Monroe wants to create a fund today that will enable her to withdraw $26.400 per year for 8 years, with the first withdrawal to take place 5 years from today. Click here to view factor tables If the fund earns 10% interest, how much must Sally invest today? (Round factor values to 5 decimal places, eg. 1.25124 and final answer to 0 decimal places, eg 458,581) Investment amount eTextbook and Media Save for Later Attempts: 0 of 5 used Submit Answer
Barbara Jones made an investment of $7,606.08. From this investment, she will receive $1,000 annually for the next 15 years starting one year from now. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What rate of interest will Barbara's investment be earning for her? (Hint: Use Table 4.) (Round answer to 0 decimal places, e.g. 25%) Rate of interest %
Morgan has $500,000 accumulated in her RRSP and intends to use the amount to purchase a 20-year annuity. She is investigating the size of annuity payment she can expect to receive, depending on the rate of return earned by the undistributed funds. What nominal rate of return must the funds earn for the monthly payment to be: a. $3000? b. $3500? c. $4000
You would like to provide $113,000 a year forever for your heirs. How much money must you deposit today to fund this goal if you can earn a guaranteed 8.2 percent rate of return? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Paul Finley wishes to become a millionaire. His money market fund has a balance of $239,392 and has a guaranteed interest rate of 10%. How many years must Paul leave that balance in the fund in order to get his desired $1,000,000? Round answer to 0 decimal places, e.g. 45.)

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