Explore BrainMass


Study Question help (6 questions)

1) What's the present value of: a. $9,000 in 7 years at 8 percent? b. $20,000 in 5 years at 10 percent? c. $10,000 in 25 years at 6 percent? d. $1,000 in 50 years at 16 percent? 2) Say you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? b.

Which investment alternative should be chosen

Mark Grace Inc. has $572,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Grace select? Assum

Future and Present Value- Annuities

Use the following information in answering Cases 1 and 2 below: On January 1, 1998, Dodd Company sold $800,000 of 10% bonds, due January 1, 2008. Interest on these bonds is paid on July 1 and January 1 each year. According to the terms of the bond contract, Dodd must establish a sinking fund for the retirement of the bond p

Retirement Plans and ERISA

How can I distinguish around various types of retirement plans? What are the requirements of ERISA that plan sponsors must fulfill? What is the difference between defined contribution and defined benefit retirement plans? What are differences between 401(k) and 401(b) plans? What are the fiduciary responsibility impos


You are to receive $1500 forever from the federal government as the winner of the national fiscally prudent and awareness contest. The government also has provided you with the option of choosing $1700 over the next 30 years. Payments are to be received semi-annually and if the market rate of interest is 8% what is the value of

Earnings management

The company X has been in business for 100 years. For the last 3 years this company reported operating losses. The controller identified three areas in which company X has some flexibility in its accounting assumptions: depreciation, bad debts, and pension accounting. How the controller can use accounting assumptions in these

Finance Scenario's

1.) John Longwaite will receive $100,000 in 50 years. His friends are very jealous of him. If the funds are discounted back at a rate of 14 percent, what is the present value of his future "pot of gold"? 2.) Al Lopez invests $2,000 in a mint condition Nolan Ryan baseball card. He expects the card to increase in value by 20 pe

PV of uneven or missing cash flows

2. College Ed. saving account (SA). For 2 kids, first kid will start in 5 yrs., second in 7 yrs. Tuition cost $10,000 today, and rising 5% per yr. Tuition is paid out at beginning of yr., both kids in 4-yr programs. SA PV $50,000. Plan fixed contributions over next 5 yrs at end of each yr. with last contribution the end of year

Applying Time Value

Applying Time Value. You can buy property today for $3 million and sell it in 5 years for $4 million. (You earn no rental income on the property). a. If the interest rate is 8 percent, what is the present value of the sales price? b. Is the property investment attractive to you? Why or why not? c. Would your answer to (

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


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


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


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