Peter Lynchpin wants to sell you an investment contract that pays equal $12,500 amounts at the end of each of the next 19 years. If you require an effective annual return of 8 percent on this investment, how much will you pay for the contract today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Value today

Peter Lynchpin wants to sell you an investment contract that pays equal $12,500 amounts at the end of each of the next 19 years. If you require an effective annual return of 8 percent on this investment, how much will you pay for the contract today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Value today

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

8th Edition

ISBN:9781285065137

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter5: Time Value Of Money

Section: Chapter Questions

Problem 41SP

See similar textbooks

Similar questions

Problem 06.027 AW of a Permanent Investment How much must you deposit each year into your retirement account starting now and continuing through year 10 if you want to be able to withdraw $85,000 per year forever, beginning 30 years from now? Assume the account earns interest at 10% per year. The amount to be deposited is determined to be $ 20,562.41
Problem 9-30 (Algo) Payments required [LO4] You need $24,756 at the end of 8 years, and your only investment outlet is an 9 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. Use Appendix B and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. What single payment could be made at the beginning of the first year to achieve this objective? Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Single payment made b. What amount could you pay at the end of each year annually for 8 years to achieve this same objective? Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Amount to be paid
nt question Q1. Find the present value of 30 annual payments of $2,000 per annum where the first payment is made 14 years from now. So there are 30 annual payments from t=14 to t=43 inclusive. The discount rate is 5% pa. The present value of these payments is: Question 8Select one: a. $4,908.18 b. $16,304.68 c. $21,212.85 d. $30,282.15 e. $30,744.9
FIN2230 Chapter 9 Assignment i 4 If you invest $14,500 per period for the following number of periods is received at the beginning of each year. (Annuity in advance) (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole dollar.) a. 9 years at 4 percent Future value $ b. 16 years at 12 percent Future value $ c. 20 periods at 15 percent Saved Future value
10 [Question text] Kumar has three options for settling an insurance claim. Option A will provide $1,500 a month for 6 years. Option B will pay RM1,025 a month for 10 years. Option C offers $85,000 as a lump sum payment today. The applicable discount rate is 7 percent compounded monthly. Which option should Kumar select, and why, if he is only concerned with the financial aspects of the offers? Select one: A. Option A: It provides the largest monthly payment. B. Option C: It is all paid today. C. Option B: It has the largest value today. D. Option B: It pays the largest total amount.
Chapter 10 Discussion Q2 A perpetuity will pay $900 per year, starting five years after the perpetuity is purchased. What is the present value (PV) at time 0, given that the interest rate is 11%? Show your steps. A) $2695 B) $4312 C) $5390 D) $3234
Problem 5-10 Calculating Perpetuity Values [LO 1] The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $29,000 per year forever. Assume the required return on this investment is 7.5 percent. How much will you pay for the policy? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Policy value today
Question 6 An investment offers GH¢ 2,250 per year for 15 years, with the first payment occurring one year from now. If the required return is 10 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?
A Question 1 Suppose you are offered an investment that will allow you to triple your money in 8 years. What is the implied rate of interest? Retake question O 14.72 percent O 9.26 percent Not enough information 11.61 percent 8.50 percent
Problem 6-7 Calculating Annuity Values [LO1] You plan to deposit $5,200 at the end of each of the next 25 years into an account paying 10.3 percent interest. a. How much money will you have in the account in 25 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. How much will you have if you make deposits for 50 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) X Answer is not complete. a. Future value of 25 deposits b. Future value of 50 deposits $ 41,956.81 x
QUESTION 12 A borrower is purchasing a property for $250,000 and can choose between two possible loan alternatives. The first is a 90% loan for 30 years at 8.5% interest and the second is a 80% loan for 30 years at 8.25% interest. Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money? 10.43% 12.45% 13.50% O 10.05%
QUESTION 1 Investment A will make N annual payments of $300.00 with the first of the N payments due immediately. Investment A has a value of $20000.00. Investment B is an ordinary annuity that will make (N minus 1) annual payments of $300.00 with the first payment due in one year from today. If investment A and investment B have the same expected return, then what is the value of investment B? O $19700.80(plus or minus $0.10) O $19700.00(plus or minus $0.10) O $19701.70(plus or minus $0.10) O $19701.10(plus or minus $0.10) O None of the above is within $0.10 of the correct answer