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FINANCE HOMEWORK What is the present value of $3,000 per year for-(Answered)

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FINANCE HOMEWORK

  • What is the present value of $3,000 per year for 8 years discounted back to the present at 9 percent is $_____(Round to the nearest cent)

  • You are graduating from college at the end of this semester and after reading The Business of Life box in this chapter, you have decided to invest $4,400 at the end of each year into a Roth IRA for the next 40 years. If you earn 6% compounded annually on your investment, how much will you have when you retire in 40 years? How much will you have if you wait 10 years before beginning to save and only make 30 payments into your retirement account? (Round to nearest cent)

  • Mr. Bill S Preston, Esq., purchase a new house for $90,000. He paid $10,000 upfront and agreed to pay the rest over the next 30 years in 30 equal annual payments that include principal payments plus 14 percent composed interest on the unpaid balance. What will these equals payments be? (Round to nearest dollar)

  • To pay for your child?s education, you wish to have accumulated $13,000 at the end of 14 years. To do this, you plan to deposit an equal amount into the bank at the end of each year. If the bank is willing to pay 12% compounded annually. How much must you deposit each year to obtain your goal? (Round to nearest cent)

  • How long it take to pay off a loan of $55,000 at an annual rate of 11 percent compounded monthly if you make a monthly payments of $650? Use five decimal places for the monthly percentage rate in you calculation. (Round to one decimal place).

  • Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $18,684.86 that will pay them $3,000 per year for 20 years. They don?t have the slightest idea what return they would be making on their investment of $18,864.86. What rate of return would they be earning? (Round to two decimal places).

  • On December 31, Beth bought a yatch for $120,000. She paid $14,000 down and agreed to pay the balance in 5 equal annual installments that include both the principal and 11 percent interest on the declining balance. How big will the annual payment be? (Round to the nearest dollar).

  • The state lottery?s million-dollar payout provides for $1.5 million to be paid in 20 installments of $75,000 per payment. The first $75,000 payment is made immediately, and the 19 remaining $75,000 payments occur at the end of each of the next 19 years.? If 11% is the discount rate, what is the present value of the stream of cash flows? If 22 percent is the discount rate, what is the present value of the cash flows? (Round to nearest cent).

  • Lisa wants to have $1,000,000 in 60 years by making equal annual end-of-the-year deposits into tax-deferred account paying 10.00 percent annually. What must Lisa?s annual deposit be? (Round to the nearest cent)

  • What is the present value of a perpetual stream of cash flows that pay $2,000 at the end of the year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 13%? What if the appropriate discount rate is 11%? (Round to nearest cent)

  • You are given three investments alternatives to analyze. The cash flows from these three investment are as follow:

End of Year

A

B

C

1

$2,000

2,000

4,000

2

3,000

2,000

4,000

3

4,000

2,000

(4,000)

4

(5,000)

2,000

(4,000)

5

5,000

4,000

14,000

(Round to the nearest cent)


FIN HOMEWORK

 

1. What is the present value of $3,000 per year for 8 years discounted back to

 

the present at 9 percent is $_____(Round to the nearest cent)

 

2. You are graduating from college at the end of this semester and after reading

 

The Business of Life box in this chapter, you have decided to invest $4,400 at

 

the end of each year into a Roth IRA for the next 40 years. If you earn 6%

 

compounded annually on your investment, how much will you have when

 

you retire in 40 years? How much will you have if you wait 10 years before

 

beginning to save and only make 30 payments into your retirement account?

 

(Round to nearest cent)

 

3. Mr. Bill S Preston, Esq., purchase a new house for $90,000. He paid $10,000

 

upfront and agreed to pay the rest over the next 30 years in 30 equal annual

 

payments that include principal payments plus 14 percent composed interest

 

on the unpaid balance. What will these equals payments be? (Round to

 

nearest dollar)

 

4. To pay for your child?s education, you wish to have accumulated $13,000 at

 

the end of 14 years. To do this, you plan to deposit an equal amount into the

 

bank at the end of each year. If the bank is willing to pay 12% compounded

 

annually. How much must you deposit each year to obtain your goal? (Round

 

to nearest cent)

 

5. How long it take to pay off a loan of $55,000 at an annual rate of 11 percent

 

compounded monthly if you make a monthly payments of $650? Use five

 

decimal places for the monthly percentage rate in you calculation. (Round to

 

one decimal place).

 

6. Your folks just called and would like some advice from you. An insurance

 

agent just called them and offered them the opportunity to purchase an

 

annuity for $18,684.86 that will pay them $3,000 per year for 20 years. They

 

don?t have the slightest idea what return they would be making on their

 

investment of $18,864.86. What rate of return would they be earning?

 

(Round to two decimal places).

 

7. On December 31, Beth bought a yatch for $120,000. She paid $14,000 down

 

and agreed to pay the balance in 5 equal annual installments that include

 

both the principal and 11 percent interest on the declining balance. How big

 

will the annual payment be? (Round to the nearest dollar).

 

8. The state lottery?s million-dollar payout provides for $1.5 million to be paid

 

in 20 installments of $75,000 per payment. The first $75,000 payment is

 


 

made immediately, and the 19 remaining $75,000 payments occur at the end

 

of each of the next 19 years. If 11% is the discount rate, what is the present

 

value of the stream of cash flows? If 22 percent is the discount rate, what is

 

the present value of the cash flows? (Round to nearest cent).

 

9. Lisa wants to have $1,000,000 in 60 years by making equal annual end-ofthe-year deposits into tax-deferred account paying 10.00 percent annually.

 

What must Lisa?s annual deposit be? (Round to the nearest cent)

 

10. What is the present value of a perpetual stream of cash flows that pay $2,000

 

at the end of the year one and the annual cash flows grow at a rate of 2% per

 

year indefinitely, if the appropriate discount rate is 13%? What if the

 

appropriate discount rate is 11%? (Round to nearest cent)

 

11. You are given three investments alternatives to analyze. The cash flows from

 

these three investment are as follow:

 

End of Year

 

1

 

2

 

3

 

4

 

5

 


 

A

 

$2,000

 

3,000

 

4,000

 

(5,000)

 

5,000

 


 

(Round to the nearest cent)

 


 

B

 

2,000

 

2,000

 

2,000

 

2,000

 

4,000

 


 

C

 

4,000

 

4,000

 

(4,000)

 

(4,000)

 

14,000

 


 

 

Paper#9257152 | Written in 27-Jul-2016

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