You can purchase a number of shares of stock today for $20 per share. Each share guarantees a $2 dividend (receipts begin one year after the date of purchase) over the five years you plan to hold the stock. Your annual time preference rate is 12%. In order to break-even at the end of five years, what amount must the stock be sold for at that time? (Answers are rounded to nearest whole number.)
Today is your 25th birthday. You plan on retiring 35 years from today. Every month you work, starting today, you wish to put an equal amount of money into a savings account with your last deposit on the day you retire. After you retire, you will need to withdraw 10,000 a month with your last withdrawal on your 80th birthday (first withdrawal is one month after you retire). Also, when you turn 80, you plan on giving $100,000 to your grandchildren.
If the annual rate of interest is 9% (compounded monthly), how much do you need to deposit each month into your savings account?
Fieldstone Credit Union is offering a nominal interest rate of 5.82%, compounded monthly, on its savings accounts. If you make a single deposit of $2,289 today, how much will you have in the account in 4 years? Follow the conventions used in this course for precision of intermediate values. Round-of
Problem Assignment: Time Value of Money1 If you deposit $15,000 today and earn 8% annual interest, how much will you have in 9 years?2 Tiffany will receive a graduation gift of $10,000 from her parents in 3 years. If the discount rateis 7%, what is this gift worth today?3 What is the present value o
Kimberly ford invested $10,000 10 yrs ago at 16%, compounded quarterly. How much has she accumulated?
Construct an example that shows, with an opportunity rate of 0%, that the value of $1received today will be $1 in the future.
Discuss the importance of the Time Value of Money concept, and why cash flow in the future is worth less than the same amount today.
You have $350 per month to spend on a car payment. If your credit union charged 7.5% interest on a used car, how much car can you purchase if you will only finance for 4 years
Find the present value of $7,000 to be received one year from nowassuming a 3 percent annual discount interest rate. Also calculatethe present value if the $7,000 is received after two years.
Mr. Jane deposits $ 2000 every year for 20 yours and he is promised a 10% Rate of Return. Find the future value of the amount.
Time value of money questions
Your broker offers to sell you some shares of Davis andAssociates common stock that you paid paid a dividend of $2yesterday. You expect the dividend to grow at a rate of 5 percentper year for the next 3 years. If you buy the stock, you plan tohold it for 3 years and then sell it.a.
A Company just lost a lawsuit and now owes %5,500,000.However, theyhave structured the settlement to pay the amount 5 years fromnow.1.Assume they have an investment that will pay 8.0 %(compounded quarterly). What is amount each quarter they willneed to deposit to have the $5.5M in 5 years?2.Assume t
i have an assignment on time value of money , what should i write in the assignment
How much must you deposit today into a savings account, in order to be able to withdraw $69,000 from the account in 2 years and $73,000 in 7 years, if the account earns 10%?
How long would it take for Nico to save an adequate amount for retirement is he deposits $40,000 per year into an account beginning one year from today that pays 7 percent per year if he wishes to have a total of $1,000,000 at retirement? A) 15.0 years B) 15.5 years C) 14.5 years D) 16.5 years
Henry Quincy wants to withdraw $30,000 each year for 10 years from a fund that earns 8% interest. How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately?
calculate the present value of $10000 to be received in exactly 10 years, assuming an annual interest rate of 9%
How is the future value related to the present value of a single sum?
Tim paid $250 per month into his 401K retirement plan. After 30 years, he had accumulated $500,000. What the average annual rate of increase?
What will the required deposit today be in order to be able to withdraw 19,000 in 4 years and 18,000 in 14 years if the savings account pays 6.8% interest?
I am prearing for an exam and wanted to know if you offer instant help in answer to a finance problem or is there a delay?
the time value of money calculation in the module of corporate financial management
calculate the future value of $10000 invested for 10 years, assuming an annual interest rate of 9%
calculate the present value of an ordinary annuity of $5000 received annually for 10 years, assuming a discount rate of 9%
Suppose you have a choice between two accounts, Account A andAccount B. Account A provides 5% interest, compounded annually andAccount B provides 5.25% simple interest. Consider a deposit ofRs.10, 000 in both accounts.
1. Which accountprovid
Assuming a rate of 10% annually, find the FV of $1000 after 5 years.
Jack would like to save now for 3 targets. First of all, he is planning to organize a 20th Wedding Anniversary surprise party for his lovely wife Pearl 6 years from now. He will invite all their family members and friends to celebrate with them and it would cost $100,000. Second, Jack plans to bu
You owe $3,745 on your credit card. You are determined that you will not charge another purchase because you want to get this debt paid in full. The card has
an APR of 14.9 percent. How much longer will it take you to pay off this balance if you make monthly payments of $60 rather than $75?
Please show the steps taken to get to the answer.
Assume the car can be purchased for 0% down for 60 months (in lieu of rebate).
A car with a sticker price of $42,950 with factory and
dealer rebates of $5,100
You friend has decided to buy a car that cost $15,000, three
banks offered to you loans all of them will give $15,000 by four year loan at
(APR) 6%. However they are different in the type of loan and the way interest
The first bank, offered to
you amortizing loan in which the interest is compounded monthly, and payment is
made in monthly basis
The second bank, offered to you amortizing loan in which the interest
is compounded quarterly , and payment is made in quarterly basis
The third bank, offered to
in which the interest is compounded daily basis , and payment is made in yearly
Generally individuals show a time preference for money. What is time value of money and give reasons for such a preference.
b. what is the investments FV at rates of 0%, 5%, and 20% after 5 years.
1. You want to buy a car for $25,000 and have $3,000 to put down. Your payment is $516.67 for 48 months. What is your interest rate?
2. You want to buy a house. You can only afford $1,800 per month and you anticipate that taxes will be $100 per month and insurance $58.70 per month. If you finance for 15 years at 6% interest how much house can you afford?
Assume that it is now Jan 1, 2009 and you will need tk.1000 on Jan 1, 2013. your bank compounds interest @8% per.
a) how much must you deposit on Jan 1, 2010 to have a balance of tk.1000 on jan 1,2013 .
The finance manager should take in to consideration the time value of money in order to take correct finance decision.Explain
8. An investment offers $5,300 per year for 15 years with the first payment occurring one year from now. (a) If the required return is 7%, what is the value of the investment? (b) What would be the value if the payments occurred for 40 years? (c) What would be the value if the payments occurred forever? 9. A six-year, $1000 face value bond pays interest of $80 annually and sells for $950. Calculate the (a) bonds coupon rate, (b) current yield, and (c) yield to maturity. 10.
You will recieve $8500 per year for the next 15 years from an insurance policy. If a 7% interest rate is applied, what is the current value of the future payments? what is the current value? Which payment would you take=the lumpsum current value or the annual payments? Describe how you solve the pro
ByTuesday, July 1, 2014submit a 4-5 page report based on the following problem:Mary has been working for a university for almost 25 years and is now approaching retirement. She wants to address several financial issues before her retirement and has asked you to help her resolve the situations below. Her assignment to you is to provide a 4-5 page report, addressing each of the following issues separately. You are to show all your calculations and provide a detailed explanation for each issue.
Issue A:For the last 19 years, Mary has been depositing $500 in her savings account , which has earned 5% per year, compounded annually and is expected to continue paying that amount. Mary will make one more $500 deposit one year from today. If Mary closes the account right after she makes the last deposit, how much will this account be worth at that time?
Issue B:Mary has been working at the university for 25 years, with an excellent record of service. As a result, the board wants to reward her with a bonus to her retirement package. They are offering her $75,000 a year for 20 years, starting one year from her retirement date and each year for 19 years after that date. Mary would prefer a one-time payment the day after she retires. What would this amount be if the appropriate interest rate is 7%?Issue C:Marysreplacement is unexpectedly hired away by another school, and Mary is asked to stay in her position for another three years. The board assumes the bonus should stay the same, but Mary knows the present value of her bonus will change. What would be the present value of her deferred annuity?
Issue D:Mary wants to help pay for her granddaughter Beths education. She has decided to pay for half of the tuition costs at State University, which are now $11,000 per year. Tuition is expected to increase at a rate of 7% per year into the foreseeable future. Beth just had her 12th birthday. Beth plans to start college on her 18th birthday and finish in four years. Mary will make a deposit today and continue making deposits each year until Beth starts college. The account will earn 4% interest, compounded annually. How much must Marys deposits be each year in order to pay half of Beths tuition at the beginning of each school each year?
Assignment 2 Grading Criteria
Calculated the compounded interest over 20 years and evaluated the value of the savings account upon closing. (CO 1)
Calculated the bonus payout over 20 years vs. a one time payout with interest and distinguished which bonus option would be better for the client. (CO 1)
Calculated the present value of the bonus and analyzed the difference in bonus for the client. (CO 2)
Analyzed the tuition costs for the client and determined what the future costs will be and determined how these funds can be accumulated over time. (CO 4)
Written Components: Organization, usage and mechanics, APA elements, style
Need help answering this question on time value of money.How much much should you invest at the end of the year for six years if you expect to earn 8% you want to accumulate $150,000 for a new grand piano six years from today.I am getting FV=150000, N=6, R=8%, I get PMT=20447.Is this correct or did
(a) Youve inherited $20,000,000 and have decided to usethis money to open a new animal shelter in Toronto one year fromtoday. The annual operating costs are estimated to be $450,000 andare expected to grow at a constant rate of 2% (inflation) startingin year 2. If the interest rate is 4.5%, w
You have two options for purchase of a new car. You can either recieve $3000 discount off of the $25,000 price, or you can recienve 1 percent financing for 5 years. Assume annual year-end payments and an 8 percent cost of funds. Should you take the 1 percent financing or the
Miss Nadia has to choose the better of two equally costly cash flow streams,annuity A and annuity B. Annuity A is an annuity due with a cash inflow of&nbs
Lyle O Keefe invests $30,000 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Lyle withdrew the accumulated amount of money.(a) Compute the amount Lyle would withdraw assuming the investment earns simple interest.$(b)
borrowed $90,000 march 1, 2010. amt plus accrued int at 12% compounded semiannually is to be repaid march 1, 2020. to retire this debt contribute to a debt retirement fund five equal amts starting march 1, 2015 and for next 4 years. fund expected to earn 10% per annum. how much must be contributed
You are considering the purchase of a rental property for $100,000 with $20,000 down payment. Cash flows after loan payments will be as follows. the loan balance will be $70,000 at the end of 10 years. for what price must you sell the property at the end of 10 years to provide effe
If you bought a $50,000 home in 1970 and sold it in 200 for $250,000, what would be the annoual rate of price appreciation during the 30 years (calculate monthly payment)
A neighbor of your deposited $7,500 in a local bank account that pays 3.75% with daily compounding and a 360-day year. How much could he withdraw after 8 months, assuming each month has 30 days?
We want to retire in 40 years, and we shall need $65,000 income per annum during our retirement which will last 35 years. We can save $60,000 annually during the first 9 years. We estimate that from year 6 till 10 we shall return to school for a graduate degree, which will cost $30,000 yearly in actual cash flow and opportunity cost expenses. Afterward, during years 20 to 40, our father will need nursing home care for twenty years. He has to give his house and $70,000 annually to the nursing home. Furthermore, we shall buy a yacht costing $150,000 in year 40. Additionally, well send our niece to college which will cost $70,000 for 4 years starting in year 16 from now. We would like to know what the pension fund should be to finance our retirement. Second, what annual savings should we accumulate from years 30 to 40 to be able to fund all the aforementioned expenses and our retirement. We have a discount rate of 10%.
If an employee works at the local hamburger restaurant for 40years and never earns more than minimum wage, which is $12,000 ayear. However, this employee is able to save 6% per year, or $720per year. Over the 40 year period, the employees investmentsaverage 8% interest per year. How much will
1. Explain the time value of money. Is it important for accountants to have an understanding of compound interest, annuities, and present and future value concepts? Why?
5. You plan to retire in 40 years and can invest to earn 6%. You estimate you will need $38,000 at the end of each year during your 25 years of retirement. During your retirement years you estimate you will be able to earn 5%. How much do you estimate you will need to set aside at the end of each ye