Question: How long before a future payment of $1000 would a payment of just $100 (only 10% of the nominal amount of the future payment) be

How long before a future payment of $1000 would a payment of just $100 (only 10% of the nominal amount of the future payment) be an economically equivalent alternative? Round your answer to the nearest month. Assume money can earn 4.8% compounded semiannually.

Step by Step Solution

★★★★★

3.51 Rating (158 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Given PV 100 FV 1000 j 48 m 2 Since each compounding period is 6 months ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

711-B-A-C-I (1160).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Maria Addaihas been offered a future payment of $750 two years from now. If she can earn 6.5 percent compounded annually on her investment, what should she pay for this investment today?

Jim Nance has been offered a future payment of $500 three years from today. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today? What is the most...

Rounded to the nearest month, how long before a scheduled payment of $10,000 would a payment of $5000 be an economically equivalent alternative? Assume money is worth 5% compounded annually.

How long before a future payment of $1000 would a payment of just $100 (only 10% of the nominal amount of the future payment) be an economically equivalent alternative? Round your answer to the...

Issue bonds-Discount -- Priyanka Account for Issuing Bonds On June 1, 2021, Priyanka Industries issued $300,000 of 7-year, 9% bonds. Interest is payable semiannually on November 30 and May 31. Market...

Issue Bonds Discount Account for Issuing Bonds (Hints are provided after the working area below.) On April 1, 2022, Green Planet Landscaping borrowed by issuing $150,000 of 5-year, 6% bonds at 8%....

Issue Bonds-Premium Account for Issuing Bonds (Hints provided at the bottom of the working area below.) On April 1, 2022, Green Planet Landscaping borrowed by issuing $150,000 of 5-year, 6% bonds at...

Issue Bonds at Par Account for Issuing Bonds On April 1, 2022, Green Planet Landscaping borrowed by issuing $150,000 of 5-year, 6% bonds. Interest is payable semiannually on September 30 and March...

PowerPoint Assignment for BUS 401: Principles of Finance You have been asked by a manager in your organization to put together a training program explaining Net Present Value (NPV) and Future Value...

PLEASE COMPLETE NO LATER THAN 11/04 @8am Each question(1,2,& 3) must be a minimum of 200 words. Please EXPLAIN answers in FULL detail and make answers knowledgeable based off the attached reading,...

Will the effective rate of interest be the same on a $10,000 face value, 6 percent interest-bearing note and a $10,000 face value, 6 percent discount note? Is the amount of cash received upon making...

Calculate the pH for a 0.008 M (HNO3) solution. A. 1.40 B. 2.10 C. 12.60 D. 11.90 E. None of these

Using the following information, determine the amount of liabilities on the balance sheet. Cash equals $ 2 , 5 0 0 ; stockholders' equity equals $ 2 4 , 5 0 0 ; inventories equal $ 1 , 0 0 0 ; and...

What is the difference in dividend payments between Bombardier and TELUS nonvoting shares and its voting common shares? How do you explain the difference in their trading values?

Due to a recession, the inflation rate expected for the coming year is only 3 percent. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3 percent....

Suppose you and most other investors expect the inflation rate to be 7 percent next year, to fall to 5 percent during the following year, and then to remain at a rate of 3 percent thereafter. Assume...

Define each of the following terms: a. PV; i; INT; FVn; PVAn; FVAn; PMT; m; iNom b. FVIFi,n; PVIFi,n; FVIFAi,n; PVIFAi,n c. Opportunity cost rate d. Annuity; lump sum payment; cash flow; uneven cash...

Assume the following rates are being utilized for the given yearly periods. Assume the following rates are being utilized for the given yearly periods. I = 8% for 0 lessthanorequalto t

In the entire poulation of a certain type of tree, the mean height of the trees is = 89.8 ft and the standard deviation is = 26 ft. You intend to measure a random sample ofn = 48 n = 48 trees. The...

What will be the monthly payment on a $75,000 30-year home mortgage with 12% APR?