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Annuity

Future Value of an annuity..

Your uncle has agreed to deposit \$3,000 in your brokerage account at the beginning of each of the next five year (t=0,t=1,t=2,t=3 and t=4) You estimate that you can earn 9 percent a year on your investments. How much will you have in your account four years from now (at t=4) Assume that no money is withdrawn from the account

Determine the life cycle costs of the MM and GTG systems

Please see the attachment. Financial Analysis You are a financial analyst for the fictional Evergreen School District in Washington. The Facilities Department has proposed replacement of the heating and ventilation systems in the District's twenty elementary schools. The current systems have reached the end of their usefu

Payment amount

If you have \$20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of five years? a. \$3,525.62 b. \$5,008.76 c. \$3,408.88 d. \$2,465.78

How many years to reach a \$10,000 goal at \$1250 per year

You need to accumulate \$10,000. To do so you plan to make deposits of \$1250 per year, with the first payment being made a year from today in a bank account that pays 12 percent interest. Your last deposit will be less than \$1250 if less is need to round out to \$10,000. How many years will it take you to reach your \$10,000 goa

Future Value of Annuities: Ordinary Annuity and Annuity Due

Find the future value of the following annuities. The first payment in these annuities is made at the end of year one. That is, they are are ordinary annuities. A) \$400 per years for 10 years at 10% B) \$200 per year for 5 years at 5% C) \$400 per year for 5 years at 5% D) Now rework parts a and b and c assuming that pay

Problems: Calculations for present value, future value, annuities, interest

1. What is the future value (approx.), where present value=1000, r=6% and n=1? a. 1060.00 b. 1600.00 c. 943.40 d. 900.00 2. What is the future value (approx.), where present value=1000, r=6% and n=10? a. 1600.00 b. 400.00 c. 1790.85 d. 1645.32 3. What is the present val

Discounting Cash Outflows

The company is deciding whether to invest in a certain capital investment. The investment requires an initial outlay of \$55,000 and annual payments of \$12,000 made at the end of the year for five years. The company's discount rate is 14%. What is the present value of cash outflows related to this investment?

Present Value of Annuity and Amorization

An auto stereo dealer sells a stereo system for \$600.00 down and monthly payments of \$30.00 for the next 3 years. If the interest rate is 1.25% per month on the unpaid balance, find: A.) The cost of the stereo system; B.) The total amount of interest paid. Please show formula used. And the list of steps used to find the

Time Value of Money: 1) Calculation of Future Value and Annuity 2) Present Value of Cash flows

1) Dr. Oats, a nutrition professor, invests \$80,000 in a piece of land that is expected to increase in value by 14 percent per year for the next five years. She will then take the the proceeds and provide herself with a 10- year annuity. Assuming a 14% interest rate for the annuity how much will this be? 2) I have a contract

Compound and Accumulate Interest on Investments

5-1A. (Compound interest) To what amount will the following investments accumulate? a. \$5,000 invested for 10 years at 10 percent compounded annually b. \$8,000 invested for 7 years at 8 percent compounded annually c. \$775 invested for 12 years at 12 percent compounded annually d. \$21,000 invested for 5 years at 5 percent com

Financial Management

1. Raybac is about to go public. Its present stockholders own 5000,000 shares. The new public issue will represent 800,000 shares. The shares will be priced at \$25 to the public with a 4% spread. The out-of-pocket costs will be \$450,000. What are the net proceeds to the firm? \$18,750,000 \$19,200,000 \$18,250,

An individual has a \$120,000 30 year mortgage at 6% fixed.

An individual has a \$120,000 30 year mortgage at 6% fixed. This individual also has a floating rate Home Equity line of credit for \$20,000. The current rate on this loan is 8.5%. Only interest payments are required on the Home Equity line. The individual has an increase in discretionary income of \$500 per month. Assuming

Ali Shah sets aside 2,000 each year for 5 years.

Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use following two tables in this order: a) present value of an annuity of \$1; future value of an annuity of \$1

Solving for an annuity

Morgan Jennings, a geography professor, invests \$50,000 in a parcel of land that is expected to increase in value by 12 percent per year for the next five years. He will take the proceeds and provide himself with a 10- year annuity. Assuming a 12 percent interest rate, how much will this annuity be?

Solving for an annuity - You wish to retire after 18 years

You wish to retire after 18 years, at which time you want to have accumulated enough money to receive an annuity of \$14,000 a year for 20 years of retirerment. During the period before you can earn 11 percent annually, while after retirement you can earn 8 percent on your money. What annual contributions to the retirement fund w

Retirement: Cash or Ordinary Annuity

A 65 year-old man is retiring and can take either \$50,000 in cash or an ordinary annuity that promises to pay him \$6,000 per year for as long as he lives. Which of the following statements is most correct? a. Because of the time value of money, the man will always be better off taking the \$50,000 up front. b. The higher the

Comparing machines with unequal lives

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs \$2,310,000 and will last for 4 years. Variable costs are 37 percent of sales and fixed costs are \$157,000 per year. Machine B costs \$4,520,000 and will last for 8 years. Variable costs for this machine are 32 percent of

Comparing Mutually Exclusive Projects: Equivalent Annual Cost (EAC)

Question: Eads Industrial Systems Company (EISC) is trying to decide between two different conveyor belt systems. System A costs \$456,000, has a 3-year life, and requires \$150,000 in pretax annual operating costs. System B costs \$521,000, has a 5-year life, and requires \$83,000 in pretax annual operating costs. Both systems are

Loan Payment If you take \$8,000 car loan that calls 48 monthly payments at an APR of 10 percent.

22. Loan Payment If you take \$8,000 car loan that calls 48 monthly payments at an APR of 10 percent. What is your monthly payment? What is the effective annual interest rate on the loan? 37. Amortizing Loan. You take out a 30-year \$100,000 mortgage loan with an APR of 6 percent and monthly payments. In 12 years you decide

Investments and Interest

1. If you invest \$2,000 a year in a retirement account, how much would you have: a. In 5 years at 6 percent? b. In 20 years at 10 percent? c. In 40 years at 12 percent? 2. You invest a single amount of \$10,000 for 5 years at 10 percent. At the end of 5 years you take the proceeds and invest them for 12 years at 15 percent.

Swenson and Swenson: Savings Account

Swenson and Swenson just decided to save \$2,200 a month for the next 6 years as a safety net for recessionary periods. The money will be set aside in a separate savings account which pays 5.5% interest compounded monthly. They deposit the first \$2,200 today. If the company had wanted to deposit an equivalent lump sum today, how

A Survey of Multiple Choice and True/False Questions Related to Business

1. Two companies are contemplating a merger. In the new entity is expected to require an initial investment of \$20 million which will then result in expense savings of \$2.7 million for 15 years. The weighted average cost of capital is 8%. The firm just issued bonds at 6.5%. The company would expect the following financial result

Present Value: Accumulated, Discounted, and Compounded Interest

a. What is present value? b. What is the present value of \$1,000 to be received in five years discounted back to the present at six percent? c. What is the future value of \$1,000 invested for 10 years at ten percent interest compounded annually? d. What is the accumulated value of \$1,000 received annually for five yea

Tuition Payment Using Bank Account Annually Compounded Interest

Tuition is \$10,000 per year for 4 years starting next year (that is, I will need to withdraw the first \$10,000 on year from today). A deposit in a bank will be made today; bank will pay 7% interest, compounded annually, a sum of money that is sufficient to provide the 4 payments of \$10,000 each. a) how large will the deposit

I need to set up an amortization schedule for a \$25,000 loan to be repaid in equal installments at the end of the next 5 years. The interest rate is 10% compounded annually.

A. I need to set up an amortization schedule for a \$25,000 loan to be repaid in equal installments at the end of the next 5 years. The interest rate is 10% compounded annually. b. How large must each annual payment be if the loan is for \$50,000? Assume that the interst rate remains at 10%, compounded annually, and that the lo

Present Values and Cash Flows

To find the present value of an uneven series of cash flows, you must find the PVs of the individual cash flows and then sum them. Annuity procedures can never be of use, even if some of the cash flows constitute an annuity (for example, \$100 each for Years 3, 4, 5, and 6), because the entire series is not an annuity. Is this st

Amount of Each Annuity Payment

Say I have a 5-year ordinary annuity with present value of \$1,000, and the interest rate is 10%, what is the amount of each annuity payment?

Choice between four retirement annuities - Jill Chew

P3-41. Jill Chew wishes to choose the best of four immediate retirement annuities available to her. In each case, in exchange for paying a single premium today, she will receive equal annual end-of-year cash benefits for a specified number of years. She considers the annuities to be equally risky and is not concerned about their

Monthly Payments to Assume Repair Costs Will Be Covered

P3-29. Mary Sullivan, capital outlay manager for Waxy Widgets, has been instructed to establish a contingency fund to cover the expenses over the next two years (24 months) associated with repairing defective widgets from a new production process. Waxy Widgets' controller wants to make equal monthly cash deposits into this fund.