You just won a lottery that promises to pay you $8,000,000 exactly 10 years from today. A company approaches you today, offering cash in exchange for your winning lottery ticket. What is the least you will sell your claim for if you can earn the following rates of return on similar-risk investments during the 10-year period? (1) 3% (2) 6% (3) 9%. Rework part a under the assumption that the $8,000,000 payment will be received in 15 rather than 10 years. On the basis of your findings in parts a and b, discuss the effect of both the size of the rate of return and the time until receipt of payment on the present value of a future sum.

You just won a lottery that promises to pay you $8,000,000 exactly 10 years from today. A company approaches you today, offering cash in exchange for your winning lottery ticket. What is the least you will sell your claim for if you can earn the following rates of return on similar-risk investments during the 10-year period? (1) 3% (2) 6% (3) 9%. Rework part a under the assumption that the $8,000,000 payment will be received in 15 rather than 10 years. On the basis of your findings in parts a and b, discuss the effect of both the size of the rate of return and the time until receipt of payment on the present value of a future sum.

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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(3) Today you have paid $275 for an investment that pays $100 in one year, $500 in two years,and $X in 4 years. Assuming the market interest rate is 100% and the net present value of theinvestment is zero, what must be true about X?(a) X is greater than $2,500(b) X is greater than or equal to $2,000 but less than $2,500(c) X is greater than or equal to $1,500 but less than $2,000(d) X is greater than $1,200 but less than $1,500(e) X is less than or equal to $1,200
.You are negotiating to make a 7-year loan of $25,000 to Breck Inc. To repay you, Breck will pay $2,500 at the end of Year 1, $5,000 at the end of Year 2, and $7,500 at the end of Year 3, plus a fixed but currently unspecified cash flow, X, at the end of each year from Year 4 through Year 7. Breck is essentially riskless, so you are confident the payments will be made. You regard 8% as an appropriate rate of return on a low risk but illiquid 7-year loan. What cash flow must the investment provide at the end of each of the final 4 years, that is, what is X?
Help me fast with detail explanation. Definitely I will give Upvote.
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You have been depositing money into an account yearly based on the following investment amounts, rates and times, what is the value of that investment account at the end of that period? (Click here to see present value and future value tables) Amounts ofInvestment Rate Times Value at the Endof the Period $9,000 20% 16 years $fill in the blank 1 $13,000 15% 11 years $fill in the blank 2 $16,000 12% 6 years $fill in the blank 3 $35,000 10% 4 years $fill in the blank 4
ou have discovered an investment opportunity that earns a 3% rate of interest compounded semiannually. What amount should you deposit today to have $7000 in three years? (Use spreadsheet software or a financial calculator to calculate your answer. Do not round any intermediary calculations, and round your final answer to the nearest dollar.) $6400 $6370 $6406 $6402
(Related to Checkpoint 5.6) (Solving for) You are considering investing in a security that will pay you $4,000 in 31 years. a. If the appropriate discount rate is 10 percent, what is the present value of this investment? b. Assume these investments sell for $2,062 in return for which you receive $4,000 in 31 years. What is the rate of return investors earn on this investment if they buy it for $2,062? C a. If the appropriate discount rate is 10 percent, the present value of this investment is $. (Round to the nearest cent.)
Real Estate investor borrowed Ksh 10million to invest in an asset at an interest rate of 10% p.a for 30 years. Calculate: I). Tha annual payment ii). The monthly payment iii). If the asset is expected to generate a return of Ksh 100000 per month. Advise the investor whether the investment in the asset is viable iv). Prepare a loan amortization schedule for the first ten years v). What other factors will you advise the investor to consider
Help me please
Assume you have the following asset and liability in your Balance Sheet: Asset - Bond A Modified Duration = 2.6 years Value = RM1.5 million Liability - Bond B Modified Duration = 3.1 years Value = RM1.0 million a. Calculate the duration gap. b. What is the expected change in Net Worth if interest increases by 1%? Assume previous interest is 10% c. What should or could you to achieve immunised balance sheet? Note: Please show all workings.
You just won a lottery that promises to pay you $1 million exactly 10 years from today. Because the $1 million payment is guaranteed by the state in which you live, opportunities exist to sell the claim today for an immediate lump-sum cash payment. What is the least you will sell your claim for if you could earn 5.05 % on similar-risk investments during the 10-year period?

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