A business wishes to have $80,000 ten years from now to make a down payment on a capital asset. How much money would the business need to invest in equal annual payments at a compound interest rate of 6% to have these funds available?
A business wishes to have $80,000 ten years from now to make a down payment on...
A loan of $80,000 is due 10 years from today. The borrower wants to make annual payments at the end of each year into a sinking fund that will earn compound interest at an annual rate of 3 percent. How much must each annual payment be?
You need $40,000 in ten years for the purchase of a new car for your nephew who will be graduating college. You currently have $20,000 saved and want to invest it for ten years at a 6% rate of return. Will you be able to achieve your investment goal in ten years? Answer If not, then how much more would you need to invest today, instead of the $20,000, to accumulate that goal in ten years? Answer If not, and you...
Mr. Bill S.Preston purchased a new house for $80,000. He paid $20,000 upfront on the down payment and agreed to pay the rest over the 25 years in 25 equal annual payments that include principal payments plus 7 percent compound interest on the unpaid balance. What will these equal payments be? 2. What is the present value of an annuity of $80 received at the beginning of each year for the next six years? The first payment will be received...
You decide that you need $88,000 in 10 years in order to make a down payment on a house. You plan to make annual deposits to achieve your goal. If interest rate is 8%, how much should be deposited each time? Hint use the Financial Function “PMT” to solve for the payment and PV will be zero. You owe $46,000 to your parents for funding some of your college. You promise to make 8 annual payments of $8,000 to settle...
1.What constant payment for the next 10 years (starting 1 year from now, 10 payments) would be equivalent to receiving $350 every other year starting 10 years from now. Assume the annual cost of capital is 13%. 2.Suppose you own two assets with the following payouts. (1) $250 at the end of every year starting 1 year from now. The annual cost of capital for these cash flows is 9%. (2) $650 one year from now and a cash flow...
Suppose a pension fund must have $10,000,000 five years from now to make required payments to retirees. If the pension wants to guarantee the funds are available regardless of future interest rate changes, it should: A. Sell a 5-year duration bond so that it matures with a book value of $10,000,000 B. Sell $10,000,000 face value discount bonds with a duration of five years C. Purchase 7-year, semi-annual coupon bonds that have a duration of five years D. Purchase 8-year,...
ou plan to make a down payment of $20,000 on a house in seven years. If the interest rates are 3% annually, compute the annual, equal amount of payments that are made to reach this goal.
"Ms. Kremer would like to purchase a new condo for $102,000. She plans to make a down payment of $55,000 and to borrow the rest of the money from the bank. The bank charges a nominal annual interest rate of 4% compounded daily. She agrees to monthly payments to pay off the loan in 12 years. Assume Ms. Kremer has made 12 payments and would like to pay off the balance immediately after payment number 12. How much does she...
Which of the following investments that pay $19,000 in five years will have a higher price today? Assume that both investments have equal risk. The security that earns an interest rate of 14.50% The security that earns an interest rate of 21.75% Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 6.80%. Assuming that both investments have equal risk and Eric's investment time horizon is...
in an attempt to have funds for a down payment In six years , James plans to save $3900 a year for the next 6 years. with an interest rate of 4% what amount will james have available for a down payment after the 6 years?