1. What is the present value (PV) of an offer of $15,000 two years from now...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. What is the present value (“PV") of an offer of $15,000 two years from now if the Opportunity Cost of Capital (“OCC”) is $12% per annum? 2. What is the PV of an offer to receive $12,000 three years from now if the OCC is 12% per annum? 3. What is the future value (“FV”) of $20,000 that grows at an annual rate of 12% per annum for two years? 4. You deposit $500 per month at the end of each month for seven years that will grow at 6% per year. How much will that be worth at the end of seven years? 5. We would like to have $20,000 at the end of five years. If we can earn 10% per year, what is the amount that we must deposit annually? 6. If you invest $20,000 and it grows to $40,000 at an annual rate of 6.5%, how much time does it require to double the amount? 7. You want to borrow $20,000,000. Today's interest rate is 6.25% and has a 20-year payback period, payable monthly. A. What is the payment? B. What is the amount owed after 10 years? C. How much interest would you have paid over the ten years? 8. Assume you purchase a property for $1,000,000. You expect to earn the following annual cash flows: Year 1 <$50,000> Year 2 $100,000 Year 3 $105,000 Year 4 $110,250 Year 5 $115,762 You also expect to sell the property in year 5 for $1,300,000. Assuming a discount rate of 10%, is this a good investment? What is the IRR of this transaction? 1. What is the present value (“PV") of an offer of $15,000 two years from now if the Opportunity Cost of Capital (“OCC”) is $12% per annum? 2. What is the PV of an offer to receive $12,000 three years from now if the OCC is 12% per annum? 3. What is the future value (“FV”) of $20,000 that grows at an annual rate of 12% per annum for two years? 4. You deposit $500 per month at the end of each month for seven years that will grow at 6% per year. How much will that be worth at the end of seven years? 5. We would like to have $20,000 at the end of five years. If we can earn 10% per year, what is the amount that we must deposit annually? 6. If you invest $20,000 and it grows to $40,000 at an annual rate of 6.5%, how much time does it require to double the amount? 7. You want to borrow $20,000,000. Today's interest rate is 6.25% and has a 20-year payback period, payable monthly. A. What is the payment? B. What is the amount owed after 10 years? C. How much interest would you have paid over the ten years? 8. Assume you purchase a property for $1,000,000. You expect to earn the following annual cash flows: Year 1 <$50,000> Year 2 $100,000 Year 3 $105,000 Year 4 $110,250 Year 5 $115,762 You also expect to sell the property in year 5 for $1,300,000. Assuming a discount rate of 10%, is this a good investment? What is the IRR of this transaction?
Expert Answer:
Answer rating: 100% (QA)
Solutions to your financial questions 1 Present Value PV of 15000 in two years at 12 OCC PV Future V... View the full answer
Related Book For
Introduction to Finance Markets Investments and Financial Management
ISBN: 978-1118492673
15th edition
Authors: Melicher Ronald, Norton Edgar
Posted Date:
Students also viewed these finance questions
-
For each problem, show your work steps. A correct answer with no work shown gets half credit (which means you fail the assignment). An incorrect answer with no work receives 0 credit. With time value...
-
Last Sale Net Bid Ask Open Int Puts Last Sale Net bid Ask Vol Open Int 16Aug 155.00(1619H155-E) 6.45 0.75 6.95 7.25 9 16Aug 155.00(1619T155-E) 1.18 (0.75) 1.17 1.25 61 4505 16Aug 166.00(1619H160-E)...
-
Find the x-values where the following do not have derivatives. + -6 + y 8 0 6 X
-
Until recently, a mining company's data resided in the department that was responsible for that information. Property data were on the computers in land administration, hydrocarbon data were in the...
-
In Problem determine the long-run behavior of the successive state matrices for the indicated transition matrix and initial-state matrices. A A 0 1 P = B0 C.2 .6 .2 (A) So = [0 0 1] (B) So = [.5 .3...
-
1. Working in small groups, complete the Pay Raise Worksheet. 2. After the class reconvenes, group spokespersons present group findings. Pay Raise Worksheet April Knepper is the new supervisor of an...
-
Holz Disc Golf Course was opened on March 1 by Ian Holz. The following selected events and transactions occurred during March. Mar. 1 Invested $20,000 cash in the business. 3 Purchased Rainbow Golf...
-
An ATV has an average acceleration of 1.9 m/s 2 . If the vehicle accelerates for 5.8 s and has an initial velocity of 15 m/s [E], what is the final velocity of the ATV?
-
A bank decides to create a five-year principal-protected note on a non-dividend-paying stock by offering investors a zero-coupon bond plus a bull spread created from calls. The risk-free rate is 4%...
-
Describe the different types of managers and how their responsibilities within a company may differ. Refer to the discussion about technical and conceptual skills later in the chapter. Which level of...
-
Could you discuss the role of chaos engineering practices in validating and improving the fault tolerance of distributed systems, whereby intentionally injecting failures and simulating real-world...
-
Can you elucidate on the concept of nested virtualization and its implications for running virtualized environments within other virtualized environments, highlighting use cases and potential...
-
A 400-g sample of an unknown (nongaseous) material experiences a 16.0C increase in temperature after absorbing 1.09 x 1041 of energy. (a) What is the specific heat of this material? J/(kg C)
-
How and in what ways is mental accounting detrimental to our financial well-being? On the opposite side, how might elements of mental accounting be beneficial for some individuals in financial...
-
Write a python code that will generate an embroidery file ( please I need an animal shape a bird or spider or any other animal ) to be produced using automated embroidery machine . The JEF file...
-
Observations were made in the workplace and their distributions were obtained as follows. Type of Time Number of Observation Bench running 1212 Bringing workpiece 65 Bringing the welding wire 40...
-
TRUE OR FALSE: 1. Banks with a significantly large share of fixed-interest rate home loans are less exposed to interest rate risks. 2. Although Australian banks are pretty big, they are not...
-
Describe the relationship between internal and external financing in meeting the long-term financial needs of a firm.
-
The Jackman Company had sales of $1,000,000 and net income of $50,000 last year. Sales are expected to increase by 20 percent next year. Selected year-end balance sheet items were: Current assets =...
-
Describe the differences among the following three types of orders: market, limit, and stop-loss.
-
Eugene Fama and Robert Shiller recently won the Nobel Prize in economics. Go to http://nobelprize.org/nobel_prizes/economics/ and locate the press release on Eugene Fama and Robert Shiller. What was...
-
Visit the Bloomberg Markets website at www.bloomberg.com/markets/stocks. Their interactive graph allows you to see cumulative returns for individual stocks as well as market indices. Over the last...
-
Compute the price of a share of stock that pays a \($5\) per year dividend and that you expect to be able to sell in one year for \($40\), assuming you require a 5% return.
Study smarter with the SolutionInn App