Z Pane 1. If the interest rate is 4%, what are the proceeds of a $5,000...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Z Pane 1. If the interest rate is 4%, what are the proceeds of a $5,000 investment after 10 years? a) assuming simple interest b) assuming compound interest 2. What if interest in #1 is compounded semi-annually? What if monthly? 3. How much do you need to deposit into a bank in order to receive proceeds of $200,000 in 5 years if the interest rate is 2.5% What if interest is compounded quarterly? 4. What is the present value of $200,000 to be received in 5 years if the rate of discount is 2.5%? 5. What is the price today of a $200,000 cash flow in 5 years if the discount rate is 2.5% 6. What is the price today of $200,000 to be received in 6 years if the rate of discount is 2.5%? Compare to #5. 7. What is the price today of $200,000 to be received in 5 years if the rate of discount is 3%? Compare to #5. 9. a) What must be the interest rate in order for an investment of $1,000 to produce proceeds of $2,000 in 20 years? b) If a cash flow of $2,000 in 20 years has a price today of $1,000, what discount rate (i.e., the "implied" rate)? must be the 10. An asset promises to pay $50,000 in five years and $100,000 in ten years. What is its price if the 5-year rate of discount is 10% and the 10-year rate of discount is 5%? 11. An asset promises to pay $1,000 in each of the next two years. a) What is its present value assuming the one-year rate of discount is 1.5% and the two- year is 2.2%? b) What is its present value assuming both discount rates are 1.85%? 12. An asset promises to pay $60 in each of the next three years. Assume the rate of discount is 5% for each of the years. a) Calculate its price the "long" way; i.e., just as you have been doing for #10 and #11, by discounting each future cash flow and summing. b) Calculate its price using the annuity formula. 13. For the annuity in #12, what happens to it price if the rate of discount increase to 6%? 14. For the annuity in #12, what happens to it price if: a) its maturity is raised to four years? 2 642 words English (United States) J Focus + Z Pane 1. If the interest rate is 4%, what are the proceeds of a $5,000 investment after 10 years? a) assuming simple interest b) assuming compound interest 2. What if interest in #1 is compounded semi-annually? What if monthly? 3. How much do you need to deposit into a bank in order to receive proceeds of $200,000 in 5 years if the interest rate is 2.5% What if interest is compounded quarterly? 4. What is the present value of $200,000 to be received in 5 years if the rate of discount is 2.5%? 5. What is the price today of a $200,000 cash flow in 5 years if the discount rate is 2.5% 6. What is the price today of $200,000 to be received in 6 years if the rate of discount is 2.5%? Compare to #5. 7. What is the price today of $200,000 to be received in 5 years if the rate of discount is 3%? Compare to #5. 9. a) What must be the interest rate in order for an investment of $1,000 to produce proceeds of $2,000 in 20 years? b) If a cash flow of $2,000 in 20 years has a price today of $1,000, what discount rate (i.e., the "implied" rate)? must be the 10. An asset promises to pay $50,000 in five years and $100,000 in ten years. What is its price if the 5-year rate of discount is 10% and the 10-year rate of discount is 5%? 11. An asset promises to pay $1,000 in each of the next two years. a) What is its present value assuming the one-year rate of discount is 1.5% and the two- year is 2.2%? b) What is its present value assuming both discount rates are 1.85%? 12. An asset promises to pay $60 in each of the next three years. Assume the rate of discount is 5% for each of the years. a) Calculate its price the "long" way; i.e., just as you have been doing for #10 and #11, by discounting each future cash flow and summing. b) Calculate its price using the annuity formula. 13. For the annuity in #12, what happens to it price if the rate of discount increase to 6%? 14. For the annuity in #12, what happens to it price if: a) its maturity is raised to four years? 2 642 words English (United States) J Focus +
Expert Answer:
Answer rating: 100% (QA)
1 a For simple interest the formula to calculate the proceeds A of an investment after a certain period of time t is given by A P1 rt where P is the principal amount r is the interest rate and t is th... View the full answer
Related Book For
Fundamentals Of Financial Management
ISBN: 9780357517574
16th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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...
-
1 What are the main components of personal financial planning? Solve What is the purpose of a financial plan? Solve Identify some common actions taken to achieve financial goals. How does a job...
-
a. Given the following information, calculate the expected value for Firm Cs EPS. Data for Firms A and B are as follows: E(EPS A ) = $5.10, and A = $3.61; E(EPS B ) = $4.20, and B = $2.96. b. You...
-
Members of the Jefferson County High School, T varsity football team circulated a petition that said: I hate Coach Euvard [sic] and I dont want to play for him. Thereafter, all team members were...
-
Find a recent sustainability report. Good reports can be found at the Australian Reporting Awards website; however, it might be useful to compare these to other firms reports. Required Prepare a...
-
What characterizes an audit at the managerial level and one at the compliance level?
-
The Clorox Company is a leading manufacturer and marketer of consumer and institutional products with approximately 8,100 employees worldwide and fiscal year 2011 net sales of $5.2 billion. The...
-
Problem The inventory balances of Tranquil Company as of January 1, 2021 are given below: Raw Materials @ P 5.34 Finished Goods Work in process P 21,360 P 17,120 P 15,112 Job 20-A Job 20-B Materials...
-
Design a multistage amplifier on pspice with the given design requirements and restrictions Design Goals: Max of 5 Stages Bandwidth: 1K - 20K Input Impedance > 1 MQ Output Impedance: 600 Q Phase...
-
The probability that a molecule that collided with another molecule at time \(t=0\) and that did not experience any other collisions up to time \(t\) will experience a collision during the time...
-
What reporting requirements apply when the auditor wishes to emphasize a matter in his report?
-
a. What is meant by the term uncertainties? b. Identify four types of uncertainties.
-
As a sales manager, how would you educate your sales force about the Uniform Commercial Code? Go to www.law.cornell.edu/ucc and review the UCC. What topics do you think are most relevant for...
-
Indicate the effects on the auditor's report of an uncertainty when the resolution of the matter may have a material effect on the financial statements.
-
Tiger, Inc. signed a lease for equipment on July 1, 2007.The lease is for 10 years (the useful life of the asset).The first of 10 equal annual payments of $500,000 was made on July 1, 2007.The...
Study smarter with the SolutionInn App