Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 9, Problem 23P
Summary Introduction
To calculate: The present value of all future benefits with a discount rate of 11%.
Introduction:
Present value (PV):
The current value of an investment or an asset is termed as its PV. It is calculated by discounting the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year: $2.20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the end of the year he will be able to sell the stock for $33. What is the percent value of all future benefits if a discount rate of 11 percent is applied?
An individual is investing in a market where spot rates and forward rates apply.
In this market, if at time t=0 he agrees to invest £5.0 for two years, he will receive £7.1 at time t3D2
years. Alternatively, if at time t=0 he agrees to invest £4.4 at time t=1 for either one year or two years,
he will receive £7.6 or £8.0 at times t=2 and t=3, respectively.
Calculate the price per £5,000 nominal that the individual should pay for a fixed-interest bond bearing
annual interest of 6.5% and is redeemable after 3 years at 105%. State your answer at 2 decimal
places.
Answer:
Check
An investor is considering the following opportunity: He will put capital into a start-up company today. He will not
receive any cash flows from the investment until end of the 5th year. At that point, he will receive 11.00 years of
$20,000.00 per year. If his discount rate on this investment is 14.00%, what is the value of this opportunity today?
Chapter 9 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Ch. 9 - Prob. 1DQCh. 9 - How is the present value of a single sum related...Ch. 9 - Prob. 3DQCh. 9 - Does inflation have anything to do with making a...Ch. 9 - Adjust the annual formula for a future value of a...Ch. 9 - If, as an investor, you had a choice of daily,...Ch. 9 - What is a deferred annuity? (LO9-4)Ch. 9 - Prob. 8DQCh. 9 - Prob. 1PCh. 9 - Prob. 2P
Ch. 9 - a. What is the present value of $140,000 to be...Ch. 9 - If you invest $9,000 today, how much will you have...Ch. 9 - Prob. 6PCh. 9 - Your uncle offers you a choice of $105,000 in 10...Ch. 9 - Your father offers you a choice of $105,000 in 12...Ch. 9 - Prob. 9PCh. 9 - How much would you have to invest today to receive...Ch. 9 - If you invest $8,500 per period for the following...Ch. 9 - Prob. 12PCh. 9 - Mrs. Crawford will receive $7,600 a year for the...Ch. 9 - Phil Goode will receive $175,000 in 50 years. His...Ch. 9 - Sherwin Williams will receive $18,500 a year for...Ch. 9 - Carrie Tune will receive $19,500 for the next 20...Ch. 9 - The Clearinghouse Sweepstakes has just informed...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - At a growth (interest) rate of 10 percent...Ch. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Juan Garza invested $20,000 10 years ago at 12...Ch. 9 - Prob. 26PCh. 9 - Prob. 27PCh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - You need $28,974 at the end of 10 years, and your...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33PCh. 9 - Prob. 34PCh. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Del Monty will receive the following payments at...Ch. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Prob. 41PCh. 9 - Prob. 42PCh. 9 - Prob. 43PCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Your younger sister, Linda, will start college in...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Suppose that Paolo is 45 years old and has no retirement savings. He wants to begin saving for retirement, with the first payment coming one year from now. He can save $12,000 per year and will invest that amount in the stock market, where it is expected to yield an average annual return of 8.00% return. Assume that this rate will be constant for the rest of his's life. Paolo would like to calculate how much money he will have at age 65. Using a financial calculator yields a future value of this ordinary annuity to be approximately Paolo would now like to calculate how much money he will have at age 70. Using a financial calculator yields a future value of this ordinary annuity to be approximately at age 65. Paolo expects to live for another 25 years if he retires at age 65, with the same expected percent return on investments in the stock market. Using a financial calculator, you can calculate that Paolo can withdraw retirement at age 65), assuming a fixed withdrawal each year and $0…arrow_forwardZachary has purchased an investment that he expects to produce income of $3,000 at the end of the first year and $4,000 at the end of the second year. If he pays $5,800 for this investment, what is the internal rate of return?arrow_forwardHashim wants to invest an amount of OMR. 9500 every year to buy a house at the end of 12 years. For this purpose, he wants to invest some money in a saving bank but does not know the exact amount of money he will get after 12 years a) What amount will he receive assuming an interest rate of 3.005%? b) What amount will he receive assuming an interest rate of 6.50%? c) Suggest the option which will be enough to meet his house which is estimated to be OMR. 100000?arrow_forward
- Tobi owns a perpetuity that will pay $1,500 a year, starting on year from now. He offers to sell you all of the remaining payments after the next 25 payments have been paid. what price should you offer him for payments 26 onward if you desire a rate of return of 8%? What does your offer price illustrate about the value of perpetuites?arrow_forwardSalvatore has the opportunity to invest in a scheme which will pay $5,000 at the end of each of the next 5 years. He must invest $10,000 at the start of the first year and an additional $10,000 at the end of the first year. What is the present value of this investment if the interest rate is 3%?arrow_forwardYour grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $7,750 a year at the end of each of the next eight years 2. $48,350 (lump sum) now 3. $99,350 (lump sum) eight years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity factor table.) factor table.) (Click the icon to view the future value annuity factor table.) factor table.) (Click the icon to view the present value (Click the icon to view the future value Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1arrow_forward
- Salvatore has the opportunity to invest in a scheme that will pay $10,000 at the end of each of the next 5 years. He must invest $20,000 at the start of the first year and an additional $20,000 at the end of the first year. What is the present value of this investment if the interest rate is 4%? A) $3,588.11 B) -$5,287.45 C) $5,287.45 D) -$3,588.11arrow_forwardYour grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,750 a year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $98,650 (lump sum) seven years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value (Click the icon to view the present value annuity factor table.) factor table.) (Click the icon to view the future value annuity factor table.) factor table.) (Glick the icon to view the future value Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1arrow_forwardYour client is 26 years old. She wants to begin saving forretirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an averagereturn of 10% in the future.a. If she follows your advice, how much money will she have at 65?b. How much will she have at 70?c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdrawat the end of each year after retirement at each retirement age?arrow_forward
- Your client is 29 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $15,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 8% in the future. a. If she follows your advice, how much money will she have at 65? Do not round Intermediate calculations. Round your answer to the nearest cent. $ b. How much will she have at 70? Do not round Intermediate calculations. Round your answer to the nearest cent. $ c. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round Intermediate calculations. Round your answers to the nearest cent. Annual withdrawals if she retires at 65: $ Annual withdrawals if she retires at 70: $arrow_forwardAllan decides to invest in a new company which would allow him to receive $ 250,000 at the end of each year for the next 5 years. He purchases 100,000 shares at the price of $ 6.50. What is the NPV of a single share, if the interest rate is 15% per year?arrow_forwardPaolo is considering purchasing a Sunlife Capital investment. Paolo will receive P1,000 every three months for the next two years if he purchases the investment. He would make the first P1,000 payment as soon as he purchases the investment. How much should Paolo be willing to pay for this investment if his required rate of return is 16%? * P1,345.60 P10,764.80 P7,002.05 P1,368.57arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education