You have entered into an agreement for the purchase of land. The agreement specifies that you will take ownership of the landimmediately. You have agreed to pay $50,000 today and another $50,000 in three years. Calculate the total cost of the land today,assuming a discount rate of (a) 5%, (b) 7 %, or (c) 9%.Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of$1)a.b.C.PaymentAmount$ 50,00050,00050,000InterestRate75%7%9%Answer is complete but not entirely correct.CompoundingAnnuallyAnnuallyAnnuallyPeriodDue3 years3 years3 years$Total Cost ofLand Today93,121.25 X90,816.30✔88,617.30

Present Value is the current price of future value which will be received in near future at some…

Answered: You have entered into an agreement for…

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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Find the interest earned on $5,750 deposited into a savings account for 3 1/2 years at an annual interest rate of 4 1/2% a. What formula should be used? b. What are you trying to find and what variable does it represent in the formula? c. Solve the problem showing all of your work (must show all steps!!) d. Interpet your answer using a complete sentence You may use the box below to upoload a picture of your written explanation or type it out in the box. Use the "mountain" button to add pictures.
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Suppose that your colleague has approached you with an opportunity to lend $25,000 to her laundry business in Accra. The business, called Do it yourself launderette, plans to offer home services to customers at area. Funds would be used to lease a delivery vehicle, purchase supplies, and provide working capital. Terms of the proposal are that you would receive $5,000 at the end of each year in interest with the full $25,000 to be repaid at the end of a ten year period Assuming a 10% required rate of return, calculate the present value of cash flows and the net present value of the proposed investment Based on this same interest rate assumption, calculate the cumulative cash flow of the proposed investment for each period in both nominal and present value terms?
You purchase a $1,152,000 lake house and made a down-payment of $658,000. If you were to use the tvm solver to determine the monthy payment, what values would you enter for PV and FV?
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Here is the deal: You can pay your college tuition at the beginning of the academic year or the same amount at the end of the academic year. You either already have the money in an interestbearing account or will have to borrow it. Deal, or no deal? Explain your financial reasoning. Relate your answer to the time-value of money, present value, and future value

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