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Annuity

Problem Set

1. An investor expects the value of a 1,000 dollar investment to double within 8 years. What is the expected annual rate of growth in the investment 2. A firm has a total sebt of 600,000 and equity of 400,000. What is the debt/net worth ratio and the debt to total assets ratio for the firm? please show the calculations

Accounting

13-4 The following data have been collected for the past two years for the Northern Division of Loring Company: 2005 2006 Sales $50,000,000 $50,000,000 Operating Income 4,500,000 4,100,000 Average Operating Assets 25,000,000 25,000,000 REQUIRED: 1. COMPUTE THE MARGIN AND TURNOVER RATIOS FOR EACH YEAR. 2. COMPUTE THE

Insurance and Pension Funds

Need help with these 2 problems. 6. A client needs assistance with retirement planning. Here are the facts  The client, Dave is 21 years old. He wants to retire at 65.  Dave has disposable income of $2,000 per month.  The IRA Dave has chosen has an average annual of 8% If Dave contributes ha

Fundamentals of Corporate Finance (4th Edition)

Solutions for select problems/chapters from the textbook: Fundamentals of Corporate Finance (4th ed.) R.A. Brealey, S.C. Myers, & A.J. Marcus McGraw-Hill/Irwin, 2004 New York, NY I hope this would help you students gain better understanding of the examples/exercises covered in the text and gain better understanding of

How to calulate NPV

What is the NPV of a project that is expected to pay $10,000 a year for 7 years if the initial investment is $40,000 and the required return is 15%.

Future Value of an annuity

For Bill's tuition expenses, his rich uncle has agreed to loan him $8,000 as he begins college, and increase it by $2,000 for the remaining 3 years (amounts $10,000, $12,000 and $14,000). Being a businessman, his uncle would at least like to have 5% on his money. Bill is to begin paying back the amount immediately after graduati

Business Finance Review Questions

What are the monthly mortgage payments on a 30-year loan for $150,000 at 12%? You have two assets in your portfolio: a stock mutual fund with a beta of 1.20 and U.S. Treasury securities (assume they are risk free). What is the beta for your portfolio if 40% of your funds are invested in the treasury securities?

Equivalent Annual Method

When trying to determine between two seperate projects I understand that the EAM is the best tool. However I am not sure how to apply this. I need to know in a step by step format how to calculate this and further how to use. For example: short-lived light bulbs last 2 years, cost is $5 and use of electricity is $5 ann

Annuities

Astros Co wants to accumulate $2,000,000 by 10/1/10. To achieve this goal, Astros Co will make the first of 6 equal annual deposits on 10/1/05. The deposits will be placed into a fund that earns interest at 10% **Compute the: 1) amount of the equal annual deposit 2) balance of the account at 10/1/08, immediately after

Annuities: Astros's homerun hitting contest; evaluation the prize choices

Astros Co is sponsoring a homerun hitting contest, with the winner receiving a choice between two equivalent prizes. Prize 1 is a lump-sum amount to be paid on 10/1/05. Prize 2 pays a total of $90,000,000 as follows: $5,000,000 per year starting on 10/1/06 with the final payment made on 10/1/14, plus bonus payments of $15,00

NPV and annuities: how much must be saved to plan for retirement

Assume that you are planning on how much you need to save for retirement. You expect to live for 30 years in retirement and would like to spend $100,000 (in real terms) per year, while leaving a $1,000,000 bequest to the International Red Cross. You are 35 years away from retirement. How much do you need to save at the end of

Several Problems

37. Consider a 4-year amortizing loan. You borrow $1,000 initially, and repay it in four equal annual year-end payments a. If the interest rate is 8 percent, show that the annual payment is $301.92. b. Fill in the following table, which shows how much of each payment is interest versus principal repayment (that is, amortization

Annual worth

The first cost of a fairly large flood control dam is expected to be $5 million. The maintenance cost will be $60,000 per year, and a $100,000 outlay will be required every 5 years. If the dam is expected to last forever, it's equivalent annual worth at an interest rate of 10% per year is closest to? A. $-576,380 B. $-591,58

INTEREST RATES

If a company wants to have $100,000 in a contingency fund 10 years from now, the amount the company must deposit each year in years 1 through 5, at an interest rate of 10% per year, is closest to? A. Less than $8,000 B. $8,420 C. $9,340 D. MORE THAN $10,000

Calculation of Annuity

A manufacturing company wants to have $100,000 available in 5 years to replace a production line. The amount of money that would have to be deposited each year at an interest rate of 10% per year would be closest to? a. 12,380 b. 13,380 c. 16,380 d. 26,380

Finance Problems

1. If you invest $100 at an interest rate of 15 percent, how much will you have at the end of 8 years? 2. An investment of $232 will produce $312.18 in 2 years. What is the annual interest rate? 3. You invest $1,000 today and expect to sell your investment for $2,000 in 10 years. a. Is this a good deal if the discount ra

Present Value Lease Calculating Annual Lease Payments

Leases R Us, Inc. (LRU) has been contracted by Robotics of Beverly Hills (RBH) to provide lease financing for a machine that would assist in automating a large part of their current assembly line. Annual lease payments will start at the beginning of each year. The purchase price of this machine is $200,000, and it will be leased

Discounted Cash Flow Valuation

Please check my computations to the following questions on the attached spreadsheet. I know that my answers for # 3 are wrong and that the correct answers are $4,167.62, $ 4,313.71, and $ 5,001.15 but I can't figure out what I'm doing wrong. I don't know if my other answers are correct or not. Question 3 - Future Value and Mu

The answer to various accounting questions

BE2-4 Becky Sherrick's regular hourly wage rate is $14, and she receives an hourly rate of $21 for work in excess of 40 hours. During a January pay period, Becky works 45 hours. Becky's federal income tax withholding is $95, her FICA tax withheld is $53.20, and she has no voluntary deductions. Compute Becky Sherrick's gross e

The Lottery: Calculating Present Value

Question: The $40 million lottery payment that you just won actually pays $2 million per year for 20 years. If the discount rate is 8%, and the first payment comes in 1 year, what is the present value of the winnings? What if the first payment comes immediately?

Annuity

Cathy is saving for her retirement by putting $325 each month into an ordinary annuity. If the annuity is expected to pay an annual interest rate of 8.5%, how much will she save for her retirement in 30 years?

Capital structure and dividend policy

Please help with the following problem. Andahl Corporation stock, of which you own 500 shares, will pay a $2-per-share dividend one year from today. Two years from now Andahl will close its doors; stockholders will receive liquidating dividends of $17.5375 per share. The required rate on return on Andahl stock is 15 percent.

Future Value

A couple is planning for the education of their two children. They plan to invest the same amount of money at the end of each of the next 16 years. The first contribution will be made at the end of the year and the final contribution will be made at the time the oldest child enters college. The money will be invested in sec

Important information about Basic financial analysis

You deposited $1,000 in a savings account that pays 8 percent interest, compounded quarterly, planning to use it to finish your last year in college. Eighteen months later, you decide to go to the Rocky Mountains to become a ski instructor rather than continue in school, so you close out your account. How much money will you r