34. Valuing Delayed Annuities. Suppose that you will receive annual payments of $10,000 for a period of 10 years. The first payment will be made 4 years from now. If the interest rate is 5 percent, what is the present value of this stream of payments? 36. Amortizing Loan. You take out a 30-year $100,000 mortgage loan with
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
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
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?
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?
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.
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
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
Multiple Choice Questions: Stock's beta, R2 for a stock and a portfolio, present value of an ordinary annuity Please see attached.
1) Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is most correct? a. Stock B's required return is double that of Stock A's. b. An equally weighted portfolio of Stock A and Stock B will have a beta less than 1.2. c. If market participants become more risk averse, the required re
Multiple Choice- Annuities ________________________________________ Solution The future value of a lump sum at the end of five years is $1,000. The nominal interest rate is 10 percent and interest is compounded semiannually. Which of the following statements is most correct? d. Both statements b and c are correct. e.
The future value of a lump sum at the end of five years is $1,000. The nominal interest rate is 10 percent and interest is compounded semiannually. Which of the following statements is most correct? a. The present value of the $1,000 is greater if interest is compounded monthly rather than semiannually. b. The effective a
1. If you borrow $15,618 and are required to pay the loan back in 7 equal annual installments of $300. What is the interest rate assocated with this loan? 2. Your rich uncle has offered you a choice of one of the three following alternatives. Which one would you take? a) $10,000 now b) $2000 a year for 8 years -equal inv
1. The future value of a $500 ordinary annuity received for three years is $________, assuming an investment rate of 10%. a. 1,655.00 b. 665.50 c. 1,820.50 d. 335.65 2. With an interest rate of 9 percent, your investment would double in about a. 4 years. b. 6 years. c. 8 years. d. 10 years. 3. An ordinary annuity
What is the effective return of an investment account that pays a 9.9 APR compounded daily (for 365 days)? Okay let's say the annual interest rate is 10%. a.) What would be the present value of a 5-year ordinary annuity with annual payments of $200? b.)What is the present value if it is a 5-year annuity due (all the rest is
1. Determine the future value of an annuity that pays $5,000 at the end of the next 11 years. Similar securities pay an interest rate of 7%. 2. How much money would you be willing to pay in order to receive $800,000 40 years from today? Assume that your required rate of return on investments is 8% compounded semiannually.
1. Today you borrow $80,000 to finance the purchase of your new sports car. Interest will be 5% compounded monthly. Payments will be made at the beginning of the month. You will repay the loan over 4 years. How much will the payments be? 2 If you borrow $100 and pay back $3600 in 5 years, what annual interest rate are you pay
You plan to retire in twenty years. When you retire, you will need $150,000 per year for thirty years with the first payment needed at t=21. You expect to receive $50,000 from a trust at t=12 which you will deposit in your retirement account. At t=10, you plan to take a world cruise that will cost you $15,000 to be paid out o
You plan to take a long trip through Europe, leaving in 5 years. You're plan is to save money for the next five years, leave at the end of the fifth year, and then survive on your savings for 3 years. You estimate you can survive in Europe on $10,000 a year. You estimate that your investment account will earn 8% forever. You
Your client plans to contribute an equal amount of money each year until her retirement. Her first contribution will come in exactly 1 year; her 10th and final contribution will come in 10 years (on her 85th birthday). How much should she contribute each year to meet her objectives?
Your client just turned 75 years old and plans on retiring in exactly 10 years (on her 85th birthday). She is saving money today for her retirement and is establishing a retirement account with your office. She would like to withdraw money from her retirement account on her birthday each year until her death. She would ideall
1. Which of the following should be used to calculate the amount of the equal periodic payments that could be equivalent to an outlay of $3000 at the time of the last payment? a) Amount of 1 b) Amount of an annuity of 1 c) Present value of an annuity of 1 d) Present value of 1 (Please give reason for answer)
1. Assume the current (4) year cost to attend Park University for tuition and books is $12,500. It is estimated that these costs will grow at a 7% annual rate. 2. The money that you annual set aside to meet this financial obligation is expected to earn an estimated 5% annually for the 7-year period (period from age 10 t
Assume you now have a child and you are planning for her college education. You would like to make monthly deposits over the next 21 years (first payment to be made one month from today) with the final payments to be made at her 21st birthday(a total of 252 deposits) so that you will be able to cover her expected expenses while
12. Your baby girl, Jessica, was born yesterday!! You have made a decision that you need to start a savings program to fund that future college education. After speaking with members of your finance class you decide to save $150 a month for the next 18 years. You feel you can get 8% average return on the savings over the 18 year
Discussion Question 1: Many people, as evidenced by the large payoffs provided for picking 6 out of 53 (or more) numbers, play the lottery. The big choice the winners face: taking a lump sum payment today or an annual payment over 20 years. Is a dollar today worth more than a dollar tomorrow? Why or why not? Which do you prefer
1) Terry Austin is 30 years old and is saving for her retirement. She is planning on making 36 contributions to her retirement account at the beginning of each of the next 36 years. The first contribution will be made today (t = 0) and the final contribution will be made 35 years from today (t = 35). The retirement account will
BE2-27 Kilarny Company is considering investing in an annuity contract that will return $20,000 annually at the end of each year for 15 years. What amount should Kilarny Company pay for this investment if it earns a 6% return?
Unless stated otherwise, interest is compounded annually and payments are at the end of the year. Explanations should be brief (1 or 2 sentences). 1. Jana, who just turned 55, would like to have an annual annuity of $25,000 paid each year for 15 years, the first payment occurring on her 66th birthday. How much must Jana sa
1. Compounding frequency and future value You plan to invest $2,000 in an individual retirement account (IRA) today at a nominal rate of 8 percent, which is expected to apply to all future years. a. How much will you have in the account after 10 years if the interest is compounded: 1. Annually 2. Semi-Annually 3. Daily
What will the monthly payment be if you take out a $100,000 15 year mortgage at an interest rate of 1% per month?
In May 1992, a 60 yr old nurse gambled $12 in a Reno casino and walked away with the biggest jackpot in history - $9.3 million. In reality, the jackpot wasn't really worth $9.3 million. The sum was to be paid in 20 annual installments of $465,000 each. What is the present value of the jackpot?