PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 2, Problem 3PS
a.
Summary Introduction
To determine: The interest received in the first year.
b.
Summary Introduction
To determine: The interest received in the second year.
c.
Summary Introduction
To determine: The interest received in the tenth year.
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Students have asked these similar questions
Old Time Savings Bank pays 8.25% interest on its savings account. If you deposit $1,000 in the bank and leave it there:
a. How much interest will you earn in the first year?
b. How much interest will you earn in the second year?
c. How much interest will you earn in the tenth year?
3. Compound interest Old Time Savings Bank pays 4% interest on its savings account. If you
deposit $1,000 in the bank and leave it there:
a. How much interest will you earn in the first year?
b. How much interest will you earn in the second year?
c. How much interest will you earn in the tenth year?
Old-time savings bank pays 4% interest on its savings accounts. If you deposit $2200 in the bank and leave it there.
1. How much interest will be earned in the first year?
2. how much interest will be earned in the second year?
3. How much interest will be earned in the 10 years?
Chapter 2 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 2 - (FV) In 1880, five aboriginal trackers were each...Ch. 2 - Prob. 2SQCh. 2 - (PV) Your company can lease a truck for 10,000 a...Ch. 2 - (RATE) Ford Motor stock was one of the victims of...Ch. 2 - Prob. 5SQCh. 2 - Prob. 6SQCh. 2 - Prob. 7SQCh. 2 - (NOMINAL) What monthly compounded interest rate...Ch. 2 - Opportunity cost of capital Which of the following...Ch. 2 - Opportunity cost of capital Explain why we refer...
Ch. 2 - Prob. 3PSCh. 2 - Compound interest New Savings Bank pays 4%...Ch. 2 - Compound interest In 2017, Leonardo da Vincis...Ch. 2 - Future values If you invest 100 at an interest...Ch. 2 - Prob. 7PSCh. 2 - Future values In the five years preceding the end...Ch. 2 - Discount factors a. If the present value of 139 is...Ch. 2 - Prob. 10PSCh. 2 - Prob. 11PSCh. 2 - Present values What is the PV of 100 received in:...Ch. 2 - Prob. 13PSCh. 2 - Present values A factory costs 800,000. You reckon...Ch. 2 - Present values Recalculate the NPV of the office...Ch. 2 - Present values and opportunity cost of capital...Ch. 2 - Perpetuities An investment costs 1,548 and pays...Ch. 2 - Perpetuities You have just read an advertisement...Ch. 2 - Growing perpetuities A common stock will pay a...Ch. 2 - Prob. 20PSCh. 2 - Prob. 21PSCh. 2 - Annuities Kangaroo Autos is offering free credit...Ch. 2 - Annuities David and Helen Zhang are saving to buy...Ch. 2 - Prob. 24PSCh. 2 - Annuities Several years ago, The Wall Street...Ch. 2 - Prob. 26PSCh. 2 - Prob. 27PSCh. 2 - Prob. 28PSCh. 2 - Prob. 29PSCh. 2 - Annuities due A store offers two payment plans....Ch. 2 - Amortizing loans A bank loan requires you to pay...Ch. 2 - Amortizing loans Suppose that you take out a...Ch. 2 - Future values and annuities a. The cost of a new...Ch. 2 - Prob. 34PSCh. 2 - Growing annuities You are contemplating membership...Ch. 2 - Prob. 36PSCh. 2 - Growing perpetuities and annuities Your firms...Ch. 2 - Compounding intervals A leasing contract calls for...Ch. 2 - Compounding intervals Which would you prefer? a....Ch. 2 - Compounding intervals You are quoted an interest...Ch. 2 - Prob. 41PSCh. 2 - Continuous compounding How much will you have at...Ch. 2 - Continuous compounding The continuously compounded...Ch. 2 - Prob. 44PSCh. 2 - Annuities Use Excel to construct your own set of...Ch. 2 - Declining perpetuities and annuities You own an...
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Similar questions
- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?arrow_forwardUse the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?arrow_forwardYou put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.arrow_forward
- You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.arrow_forwardCalculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?arrow_forwardRefer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264arrow_forward
- Old Time Savings Bank pays 6.50% interest on Its savings account. If you deposit $1,000 In the bank and leave it there: a. How much interest wil you earn in the first year? (Round your answer to 2 decimal places.) Finst year interest b. How much interest will you earn in the second year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Second year interest c. How much interest will you earn in the tenth year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Tenth year interestarrow_forward17. Old Time Savings Bank pays 8.25% interest on its savings account. If you deposit $1,000 in the bank and leave it there: a. How much interest will you earn in the first year?b. How much interest will you earn in the second year?c. How much interest will you earn in the tenth year?arrow_forwardOld Time Savings Bank pays 4% interest on its savings accounts. If you deposit $1,600 in the bank and leave it there: (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. How much interest will you earn in the first year? b. How much interest will you earn in the second year? c. How much interest will you earn in the 10th year?arrow_forward
- Bank A pays 7% simple interest on its savings account balances. Bank B pays 5.5% interest compounded annually. If you deposit $15,000 in both banks, a. How many years will it take for your balance to double in Bank A? b. What is the amount of interest earned in each bank at the end of 10 years? Which bank would you choose to open the savings account?arrow_forward4. You want to deposit $600 in a savings account. Account A earns 3.5% simple interest per year. Account B earns 3.3% interest compounded annually. a. Which account should you choose if you invest your money for 3 years? 6 years? Explain. b. After how many years is the balance in Account B greater than the balance in Account A? c. After how many years is the difference between the account balances greater than $5?arrow_forwardSuppose that your parents decide to make annual deposits into a savings account, with the first deposit being made on your fifth birthday and the last deposit being made on the 15th birthday. Then, starting on your 18th birthday, the withdrawals as shown will be made. If the effective annual interest rate is 8% during this period of time, what are the annual deposits in years 5 through 15? $3,200 $2,800 $2,400 $2,000 i - 8%/yr 7 8 9 10 11 12 13 14 Years 5th Birthday 6 15 16 17 18 19 20 21 A = ?arrow_forward
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