Sinking Fund Mr. and Mrs. Smith need $80,000 for their daughter's education in a private university after six years. They invested in a sinking fund that earns 7% compounded annually for the initial four years and the fund pays 8% compounded annually for the remaining years. Due to the higher interest rate, Mr. and Mrs. Smith decrease their remaining payments. Find the amount of the new payment. Round your answer to the nearest dollar. the answer is 10, 617
Q: Trina Alcala deposited $1,950 in a new credit union savingsaccount on the first of the quarter. The…
A: To calculate the amount in Trina's account at the end of 6 months, we need to use the following…
Q: 4 5 6 7 8 a 9 Purpose of the homework: 1. Students will learn the composition of Dow Jones…
A: The objective of this question is to understand how the Dow Jones Industrial Average (DJIA) is…
Q: A corporate bond sells for $990 currently. It has a 6-year maturity, an annual coupon of $75, and a…
A: Capital gain yield on a bond refers to the percentage increase in the bond's market price from its…
Q: Payments in years 1 through 6 are 340, 100, 0, 200, 500 and 0 respectively. What is the total…
A: Payment in year 1 = P1 = 340Payment in year 2 = P2 = 100Payment in year 3 = P3 = 0 Payment in year 4…
Q: NPV versus IRR [LO1, 5] Consider the following two mutually exclusive projects: Year Cash Flow (X)…
A: The crossover rate typically refers to the point at which two or more investment options have equal…
Q: Your friend tells you he has a very simple trick for taking one-third of the time it takes to repay…
A: Mortgage amount = $100,000Interest rate = 12%Loan term = 30 yearsTo find: a. Number of years it…
Q: Problem 5-12 Calculating EAR [LO 4] Find the EAR in each of the following cases. 12.25% quarterly…
A: EAR refers to the Effective Annual Rate.It can be calculated in Excel by using the excel formula…
Q: Dani Corporation has 5 million shares of common stock outstanding. The current share price is $71,…
A: Capital structure:The term "capital structure" encapsulates the intricate blend of financial…
Q: KYZ Company is going to purchase an equipment that costs $50,000. Useful life is expected to be 5…
A: The question is based on the idea of the Net Present Value (NPV) approach, which is used in capital…
Q: 20 A company is launching a new sales initiative and expects sales of $824,241 during the first…
A: The objective of the question is to calculate the incremental investment in operating net working…
Q: FNCE 623 Financial Management Individual assignment Belgravia Petroleum Inc. is trying to evaluate a…
A: The objective of the question is to evaluate a generation project for Belgravia Petroleum Inc. using…
Q: Given the information below for Seger Corporation, compute the expected share price at the end of…
A: Year201620172018201920202021Price$61.10$67.00$65.70$63.20$84.70$100.10EPS$3.35$4.06$4.86$5.56$7.85$8…
Q: Prices of zero-coupon bonds reveal the following pattern of forward rates: Year 1 2 3 Forward Rate…
A: Bonds can be referred as the debt financial instruments that can be issued by corporate houses for…
Q: 20 A company is launching a new sales initiative and expects sales of $824,241 during the first…
A: The objective of the question is to calculate the incremental investment in operating net working…
Q: Twelve years ago, Mr. Lawton rolled a $29,000 retiring allowance into an RRSP that subsequently…
A: RRSP stands for retirement savings plan in which an amount is contributed by the spouse, employer…
Q: Ryan Buys a 10-year semi-annual coupon 1000 par value bond to yie 6% convertible semi-annually.…
A: Price of bond is the present value of coupon payments plus present value of the par value of the…
Q: TT, Inc., has a bond outstanding with a coupon rate of 5.84 percent and quarterly payments. The…
A: Here,Par Value of Face Value of Bond is $1,000Coupon Rate is 5.84%Frequency of Coupon Payment in an…
Q: All else constant, a bond will sell at A B a premium; equal to E at par; greater than (C) at par;…
A: As per the Bond pricing theory, A Bond will be selling it's par value , if the yield to maturity =…
Q: An annuity due pays $17,250 every year for the next 6 years and earns a 7.34% annual return. How…
A: Annuity Due = a = $17,250Time = t = 6Interest Rate = r = 7.34%Type Payment = due = at the beginning
Q: You have been given the following return Information for a mutual fund, the market Index, and the…
A: Given below solution-Explanation:
Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…
A: Stock fund expected returns: 17%Standard deviation of stock: 34%Bond fund expected returns:…
Q: Problem 4-51 Calculating Annuities Due You want to lease a set of golf clubs from Pings Ltd. The…
A: Present Value of Annuity Due refers to a concept which determines the value of cash flows at present…
Q: Morteza took out a loan from a bank at a 12% APR to buy a house. The loan required him to make…
A: APR: 12%Morteza's Loan period in years: 3 Morteza sells at: 24 monthsNegin's loan period in years: 2…
Q: 1R1 = 0.4%, E(2r 1) = 1.4%, E(3r1) = 1.9%, E(4r1) = 2.25% Using the unbiased expectations theory,…
A: Treasury securities:Treasury securities, often referred to as government bonds or T-bills,…
Q: An investment project costs $15,300 and has annual cash flows of $3,700 for six years. a. What is…
A: Cost = $15,300Net annual cash flow = $3,700Number of years = 6 years
Q: the following cash flows: Year 0 1234 Cash Flow -$ NPV IRR 1,340,000 515,000 580,000 475,000 430,000…
A: When a cash stream that is earned out of an investment is redirected to another investment that…
Q: E-Eyes.com has a new issue of stock it calls 20/20 preferred. The stock will pay a $20 dividend per…
A: The DDM refers to the method of calculation of the value of stock based on the future dividends that…
Q: Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal…
A: State of the marketProbability (P)Ending priceHPR including dividends (R(s))Boom0.26$14055%Normal…
Q: Starling wants to retire with $2, 110,000 in his retirement account exactly 41 years from today. He…
A: The FV of an investment refers to the cumulative worth of the investment's cash flows at a future…
Q: Congratulations, you've just won the $3,800,000 state lottery! The lottery commission offers you the…
A: Here,AnnuityPayment is $173,000Interest Rat (r) is 15.00%Time Period (n) is 25 yearsLump-sum Pyamnet…
Q: 1. Interest Rate History (LO2, CFA5) Based on the history of interest rates, what is the range of…
A: Understanding the historical range of interest rates is essential for financial analysis and…
Q: A firm earned $250,000 cash in the most recent fiscal year. The cash flow is expected to grow 1.60%…
A: Cash flow recent year = $250,000Growth rate = 1.60%/100 = 0.0160 in decimalsDiscount rate =…
Q: pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…
A: Expected return of stock fund (S)24%Expected return of bond funds (B)12%Money market fund…
Q: Green Foods currently has $400,000 of equity and is planning an $160,000 expansion to meet…
A: Capital structure refers to the mix of a company's debt and equity financing used to fund its…
Q: Find the F value for the negative cash flows shown in the table: Year O 1 -100 14% 2 -100 14% 3 -100…
A: F value of a cash flow is nothing but the short form that is provided to denote the future value of…
Q: Required: Find the convexity of a seven-year maturity, 6.4% coupon bond selling at a yield to…
A: Bond convexity is to know the relationship between a bond's price and changes in interest rates.…
Q: Kelly is a diligent mother who has just finished supporting her two children, Susan, aged 23, and…
A: (a) Annual Savings for Randy: Determine the duration: Randy will turn 30 in five years (30 - 25).…
Q: Ultra Air's bonds have a 11-year maturity, a 10% coupon, paid semiannually, and a par value of…
A: A bond is an instrument that represents the loan that is made by the investor to the company and…
Q: A Construction company may buy a new truck with a 10-year life. Interest is 5%. The cash flows for…
A: NPW is the abbreviation used for Net present worth or net benefits after discounting the cash flows…
Q: June 2021 Mexican peso futures contract has a price of $0.05194 per MXN. You believe the spot price…
A: Futures contracts are a type of financial derivative that obligates either the buyer or the seller…
Q: Broussard Skateboard's sales are expected to increase by 20% from $7.2 million in 2019 to $8.64…
A: Sale in 2019 is $7,200,000Sales in 2020 is $8,640,000Total assets in 2019 is $3,000,000increase in…
Q: Stock XYZ started at $415. It went up to $500. What is the percent increase or decrease (relative…
A: Since the price of the stock has been increased hence we will calculate the percentage…
Q: You invest $1,900 three years from today and $1,100 four years from today. How much will you have in…
A: Finance is the management of money. The time value of money principle explains that a dollar today…
Q: The following table shows risk and return measures for two portfolios. Portfolio Average Annual Rate…
A: Average annual return on R = 11%Average annual return on S&P 500 = 14%Standard deviation on R =…
Q: If you buy a car for $49,000 use it for 9 years and then sell it for $9,000, what is the capital…
A: The idea of the minimum appealing rate of return (MARR) in conjunction with the capital recovery…
Q: Consider the following information: Stock Return if Market Return Is: Stock 12 Stock A B C D e -12 E…
A: Beta refers to the concept used for measurement of the volatility or risk which is systematic in…
Q: What is the most we should pay for a bond with a par value of $1000, coupon rate of 5.0% paid semi -…
A: Price of the bond will be equal to the present value of the coupon payments and maturity value of…
Q: A $5000 payment due 1 1/2 years ago has not been paid. If money can earn 3.25% compounded annually,…
A: TVM is the concept that considers money's interest-earning capacity, which makes money earned…
Q: XYZ stock price and dividend history are as follows: Dividend Paid at Year-End $4 Year 2018 2019…
A: Average Rate of Return:The average rate of return is calculated by summing up the returns over a…
Q: 4 5 6 7 8 a 9 Purpose of the homework: 1. Students will learn the composition of Dow Jones…
A: The objective of this question is to understand how the Dow Jones Industrial Average (DJIA) is…
Step by step
Solved in 3 steps
- Comprehensive The following are three independent situations: 1. K. Herrmann has decided to set up a scholarship fund for students. She is willing to deposit 5,000 in a trust fund at the end of each year for 10 years. She wants the trust fund to then pay annual scholarships at the end of each year for 30 years. 2. Charles Jordy is planning to save for his retirement. He has decided that he can save 3,000 at the end of each year for the next 10 years, 5,000 at the end of each year for Years 11 through 20, and 10,000 at the end of each year for Years 21 through 30. 3. Patricia Karpas has 200,000 in savings on the day she retires. She intends to spend 2,000 per month traveling around the world for the next 2 years, during which time her savings will earn 18%, compounded monthly. For the next 5 years, she intends to spend 6,000 every 6 months, during which time her savings will earn 12%, compounded semiannually. For the rest of her life expectancy of 15 years, she wants an annuity to cover her living costs. During this period, her savings will earn 10% compounded annually. Assume that all payments occur at the end of each period. Required: 1. In Situation 1, how much will the annual scholarships be if the fund can earn 6%? How much at 10%? 2. In Situation 2, (a) How much will Charles have at the end of 30 years if his savings can earn 10%? How much at 6%? (b) If Charles expects to live for 20 years in retirement, how much can he withdraw from his savings at the end of each year if his savings earn 10%? How much at 6%? (c) How much would Charles need to invest today to have the same amount available at the time he retires as calculated in Situation 2(a) at 10%? How much at 6%? 3. In Situation 3, how much will Patricias annuity be?Emma wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of j4=5% p.a. effective and the first scholarship will be first awarded 2.5 years after the date of the donation. (b) Assume that the fund's earnings rate rate has changed from j4=5% to j4=4.75% one year before the first scholarship payment. How much does Emma need to add to the fund at that time (one year before the first scholarship payment) to ensure that scholarship amount will be unchanged (rounded to two decimal places)?Emma wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of j4=4.12% p.a. effective and the first scholarship will be first awarded 2.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)? (b) Assume that the fund's earnings rate rate has changed from j4=4.12% to j4 = 3.87% one year before the first scholarship payment. How much does Emma need to add to the fund at that time (one year before the first scholarship payment) to ensure that scholarship amount will be unchanged (rounded to two decimal places)? (a) What is the amount of the annual scholarship (rounded to two decimal places)? a. 44494.20 b. 46355.87 C. 41840.92 d. 43772.21 (b) Assume that the fund's earnings rate rate has changed from 4-4.12% to 4-3.87% one year before the first scholarship payment. How much does Emma need to add to the fund at that time (one year before the first…
- Will and Jane Sparks are establishing a college fund for their 1-year-old daughter, Jennifer. They want to save enough now to pay college tuition at the time she enters college (17 years from now). If her tuition is projected to be $35,000 for a two-year degree, what annual sinking fund payment should they establish if the annual interest is 4%? E Click the icon to view the table. The annual sinking fund payment is $ (Round to the nearest cent as needed.)Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 3.43% p.a. compounded half-yearly (j2=3.43% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (b) Assume that two years after the donation, Mike needs to withdraw $1,000,000 from the fund and use the remaining amount to provide an annual scholarship in perpetuity. The time of the first scholarship will be unchanged (3.5 years after the date of the donation). What is the new annual scholarship amount (rounded to two decimal places)?Emma wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of j4=5% p.a. effective and the first scholarship will be first awarded 2.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)?
- A person sells some property She will be paid a lump sum of $80.000 in 4 years. Until then, the buyer pays 7% simple interest every quarter (a) Find the amount of each quarterly to payments to pay the sum. sets up a pays semiannually. amount of each payment into the fund (c) Complete the sinking fund table Click here to view page 1 of the sinking fund table Click here to view page 2 of the sinking fund table. (a) The simple interest payment is (Round to the nearest cent as needed.)Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 4.47% p.a. compounded half-yearly (2=4.47% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (b) Assume that two years after the donation, Mike needs to withdraw $1,000,000 from the fund and use the remaining amount to provide an annual scholarship in perpetuity. The time of the first scholarship will be unchanged (3.5 years after the date of the donation). What is the new annual scholarship amount (rounded to two decimal places)? a. 101959.37 O b. 206197.54 O c. 203631.53 O d. 207511.86The Pithybottoms want to make a donation to set up a scholarship trust fund at Hinose College. The fund is to support payments of $5,000 at the end of every three months in perpetuity. If the fund earns 7.5% compounded quarterly, how much must they donate?
- Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 4.57% p.a. compounded half-yearly (j2=4.57% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)? Question 9 Answer a. 127913.37 b. 255507.69 c. 260410.57 d. 258749.57 Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of 4.57% p.a. compounded half-yearly (j2=4.57% p.a.) and the first scholarship will be first awarded 3.5 years after the date of the donation. (b) Assume that two years after the donation, Mike needs to withdraw $1,000,000 from the fund and use the remaining amount to provide an annual scholarship in perpetuity. The time of the first scholarship will be unchanged (3.5 years after the date of the donation). What is the new annual…Jeff wishes to accumulate $7,000 in 6 years. Use the appropriate formula to find the sinking fund payment she would need to make at the end of each year, at 7% interest, compounded annually. $942.12 $978.57 O $1,432.12 O $1,468.57Sam wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of j4-3.81% p.a. effective and the first scholarship will be first awarded 2.5 years after the date of the donation. (b) Assume that the fund's earnings rate rate has changed from 4-3.81% p.a. to j4-3.56% p.a. one year before the first scholarship payment. How much does Sam need to add to the fund at that time (one year before the first scholarship payment) to ensure that scholarship amount will be unchanged (rounded to two decimal places)? Question 9Answer a. 78309.64 b. 74276.05 C. 71226.96 d. 75395.75