You are entitled to collect a payment of $500,000, 5 years from now. The interest rate...
You are entitled to collect a payment of $500,000, 5 years from now. The interest rate is 4% p.a. You have received an offer of $350,000 today for your entitlement. Should you accept the offer?
Select one:
a. No. The value of your entitlement today is $410,963.55
b. No. The value of your entitlement today is $365,708.45
c. Yes. The value of your entitlement today is $267,900.01
d. No. The value of your entitlement today is $521,009.03
e. Yes. The value of your entitlement today is $311,900.81
Homework Answers
A.No, the value of your entitlement today is $410,963.55.
working;
present value of 500,000, 5 years from now at 4%.
present value of a single amount = amount / (1+r)^n
=>500,000 / (1.04)^5
=>$410,963.55.
since the amount offered $350,000 is less than the present value of $410,963.55
Add Answer to:
You are entitled to collect a payment of $500,000, 5 years from
now. The interest rate...
If the interest rate is 6%, the present value of S800 to be received 5 years...
If the interest rate is 6%, the present value of S800 to be received 5 years from today is S Round your response to the nearest two decimal place) You are in a car accident, and you receive an insurance settlement of $5500 per year for the next three years. The first payment is to be received today. The second payment is to be received one year from today, and the third payment two years from today.If the interest rate...
1. Beatrice invests $1,000 in an account that pays 5 percent simple interest. How much more...
1. Beatrice invests $1,000 in an account that pays 5 percent simple interest. How much more could she have earned over a 10-year period if the interest had compounded annually? A. $135.42 B. $135.97 C. $121.67 D. $117.09 E. $128.89 2. You are Mr. Matthew Stafford’s agent and are negotiating a five year contract. The Lion’s make four offers: (a) $15 million a year for the next 5 years. (b) one-time payment of $95 million five years from now. (c)...
a. You are saving for retirement 10 years from now. How much should you invest today...
a. You are saving for retirement 10 years from now. How much should you invest today so you will have an annuity of $20,000 per year for 20 years starting from the 11" year? b. If you were to invest $10,000 today @6%, how much would you have at the end of 15 years? C. You are planning to save $100,000 for a yacht purchase 5 years from now. If you believe you can earn an 8% rate of return,...
You are offered the following deal: if you give me $1200 today, I will provide you...
You are offered the following deal: if you give me $1200 today, I will provide you with a 40-year annuity that grows at 5% per year. Each payment is received at the end of each year and the first payment (one year from now) is equal to $100. The appropriate interest rate for an investment of this risk is 15%. What is the PV of this stream of cash flows and should you accept the offer? A. PV is approximately...
UPJJJ 2040 If the prize continues increasing at the same rate? 3) You have some property...
UPJJJ 2040 If the prize continues increasing at the same rate? 3) You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is the payment of $45,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 10 percent, which offer should you accept and why?
24. Your grandmother is gifting you $125 a month for four years while you attend college...
24. Your grandmother is gifting you $125 a month for four years while you attend college to earn your bachelor's degree. At a 6.5 percent discount rate, what are these payments worth to you on the day you enter college? A. SS 201.16 B. 58.270.94 C. 55,509.19 D. 55,608.87 25. At 8 percent interest, how long would it take to quadruple your money? A 16.95 1664 C 1709 D. 18.01 26. You are considering two loans. The terms of the...
#4 Part 4 The Capital Budgeting Process 4. You will receive $6,800 three years from now....
#4
Part 4 The Capital Budgeting Process 4. You will receive $6,800 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from now? Multiply $6,800 X (1/1.10) or divide by 1.10 (one year's discount rate at 10 percent). b. What is the value of your iaveuitment ora year from now? Multiply your answer to part a by (1/1.10). c. What is the value of your invesanent today? Multiply your...
1. You were promised a payment of $400 for each of the next four years to...
1. You were promised a payment of $400 for each of the next four years to be received at the end of the year. What is the fair value of these payments if the interest rate is 6%? 2. Which of the following is a reason why a dollar today is worth more than a dollar two years from now? a) A dollar today can be put in the bank and charged interest. b) Individual people generally value c) consumption...
You must make a payment of $3,800 exactly 8 years from today. To prepare for this...
You must make a payment of $3,800 exactly 8 years from today. To prepare for this payment, you will make 5 equal deposits into an account that pays a nominal interest rate of 7.6% p.a., with quarterly compounding. If your first deposit is made today (and then you make four additional deposits in each of the next four quarters – that is, a deposit 3 months from today, another 6 months from today and so on), what must each of...
2. You will receive $5,000 one year from now, 6000 three years from now, and 7000...
2. You will receive $5,000 one year from now, 6000 three years from now, and 7000 five years from now in real terms. Each payment will be received at the end of the period with the first payment occurring one year from today. The relevant nominal discount rate is 9.625 percent and the inflation rate is 2.3 percent. What are your winnings worth today in real dollars? Hra 151 25 4. ABC Corp. issued a 25-year maturity bond in 2001...
If the interest rate is 6%, the present value of S800 to be received 5 years from today is S Round your response to the nearest two decimal place) You are in a car accident, and you receive an insurance settlement of $5500 per year for the next three years. The first payment is to be received today. The second payment is to be received one year from today, and the third payment two years from today.If the interest rate...
a. You are saving for retirement 10 years from now. How much should you invest today so you will have an annuity of $20,000 per year for 20 years starting from the 11" year? b. If you were to invest $10,000 today @6%, how much would you have at the end of 15 years? C. You are planning to save $100,000 for a yacht purchase 5 years from now. If you believe you can earn an 8% rate of return,...
UPJJJ 2040 If the prize continues increasing at the same rate? 3) You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is the payment of $45,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 10 percent, which offer should you accept and why?
24. Your grandmother is gifting you $125 a month for four years while you attend college to earn your bachelor's degree. At a 6.5 percent discount rate, what are these payments worth to you on the day you enter college? A. SS 201.16 B. 58.270.94 C. 55,509.19 D. 55,608.87 25. At 8 percent interest, how long would it take to quadruple your money? A 16.95 1664 C 1709 D. 18.01 26. You are considering two loans. The terms of the...
#4
Part 4 The Capital Budgeting Process 4. You will receive $6,800 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from now? Multiply $6,800 X (1/1.10) or divide by 1.10 (one year's discount rate at 10 percent). b. What is the value of your iaveuitment ora year from now? Multiply your answer to part a by (1/1.10). c. What is the value of your invesanent today? Multiply your...
2. You will receive $5,000 one year from now, 6000 three years from now, and 7000 five years from now in real terms. Each payment will be received at the end of the period with the first payment occurring one year from today. The relevant nominal discount rate is 9.625 percent and the inflation rate is 2.3 percent. What are your winnings worth today in real dollars? Hra 151 25 4. ABC Corp. issued a 25-year maturity bond in 2001...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago