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Calculating the Value of an Annuity

Ling opened an annuity to save for a down payment on a home. The annuity was created with an initial deposit of $3,500 (end of year). At the end of each of the following ten years, a payment of $4000 is made into the annuity. The interest rate is 2% compounded annually. a) Compute the balance at the end of 10 years by tabu

Corporate finance : Time value of money

13. The future value of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is ______. A. $253.00 B. $252.00 C. $158.00 D. $134.66 14. The future value of $100 received today and deposited at 6 percent for four years is A. $126. B. $ 79. C. $124. D. $116. 15-

Quantitative Reasoning for Business

#1. What do we mean by the "time value of money" and why is this concept important to making business decisions? #2. What is the difference between Present Value and Future Value? Provide examples. #3. a. Find the Future Value 2 year(s) from now of an investment of $447 today if the interest rate is 13.84% compounded

Finance question regarding compound interest and value of treasury bond

See attached file. Please refer to tab 3-16 to solve and explain. A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 5.5% (2.75% of face value every six months). The semiannually compounded interest rate is 5.2% (a six-month discount rate of 5.2/2 = 2.6%). a. What is the present value of


Consider the following four investments. a) You invest $3,000 annually in a mutual fund that earns 10% annually, and you reinvest all the distributions. How much will you have in the account at the end of 20 years? b) You invest $3,000 annually in a mutual fund with a 5% load fee so that only $2,850 is actually invested in th

Calculate annuity payment amounts with changing interest

Set up a fund of semi-annual payments to be compounded semi-annually to accumulate a some of $100,000 after 10 years at an 8 percent annual rate (20 payments). The 1st payment into the fund is to occur over 6 months starting today and the last payment is to take plae at the end of the 10th year. a. Determine how much the sem

Loans and Bonds

Part 1: Design Arts, Inc. is a young computer game design company that has been in business for two years. The company has been working on a computer game that is scheduled for release in six months. However, it has exhausted all its financial resources and needs one last loan of $100,000 to help it meet its deadline. The compa

Scenario Analysis for Mutually Exclusive Projects

Basic scenario analysis Murdock Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm's financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with each project. Project A Project B Initial investment (C

Time Value of Money

1. Calculate the future value of 1,535 invested today for 8 years at 6 percent. 2. What is the total present value of the following cash stream, discounted at 8 percent? Year Amount 1 400 2 750 3 945 4 145 5 78 3. If you invested $2,000 per year into an IR

Effective interest amortization of bond premium

See attached for best format. Question 1: (1 point) Exercise 14-5B: Effective interest amortization of bond premium L.O. P3 Dell Co. issues bonds dated January 1, 2009, with a par value of $450,000. The bonds' annual contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The bonds mature in t

Case Study - TMSAC

Taos Museum of Southwestern Arts and Crafts ? The answers to this case are cumulative. Please do not skip any section. ? You may make whatever assumptions you think are necessary to answer any question. Kindly state every assumption explicitly. ? All of the information that you need to answer a given question is provided in

Journal entry problem

On December 31, 2007 A Corporation sold some of its product to D Company, accepting a 3%, four-year promissory note having a maturity value of $900,000 (interest payable annually on December 31). D Company pays 8% for its borrowed funds. Instructions (a) Prepare the journal entries to record the transaction on the books of A

Break-Even / Operating Leverage and Cash Budget

Can you help me get started with this assignment? ----------------------------------------- Cash Budget For Company X, actual sales for November and December, and projected sales for January through August are as follows: actual sales projected sales Nov 225,000 Jan 105,000 May 280,000 Dec 180,000 Feb 115,000 Jun 255

Financial Management

Work out and submit the following problems: 1. o Mr. Smith tells Mr. Jones that he is to receive an inheritance of $1,000 at the end of three years, but he needs as much money as he can get right now. Mr. Jones normally loans money for which he receives interest at the rate of 10% per year. Mr. Jones has ample opportunity to

Expected value;standard deviation;coefficient of variation

Problems involve: expected value standard deviation coefficient of variation pv fv pva fva (see attached) I need these problems done using excel and showing how the answers were calculated. The answers are at the end of the attached problem set. I need the formulas to each problem in an EXCEL spreadsheet as w

Compound Interest

Chinn Wong wishes to purchase a $600,000 house. She has accumulated a $120,000 down payment, but she wishes to borrow $480,000 on a 30-year mortgage. For simplicity, assume annual mortgage payments occur at the end of each year and there are no loan fees. 1. What are Wong's annual payments if her interest rate is: a. 8% b.

Present Value or Future Value - WalMart parking lot

I am trying to determine what the steps to solve homework assignment below are. I am confused with future and present value annuities. Please let me know what steps I have to do. If the formulas can be provided that would be great. Assume that Wal-Mart, Inc has decided to surface and maintain for 10 years a vacant lot next

Finance" Market value of bond, PV of investment, amount of annuity deposits

1. A bond matures in 20 years, at which time it pays the owner $1,000. It also pays $70 at the end of each of the next 20 years. If similar bonds are currently yielding 8%, what is the market value of the bond? A. Over $1,000 B. Under $1,000 C. Exactly $1,000 D. Cannot be determined from the info given 2. An investment is

Homer Simpson Inc: Analysis of Alternatives for purchase of new punch press

Homer Simpson Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The Engineering Department has determined that each vendor's punch press

Analyze Jack Sawyer's copier lease: original cost, amount of payment

Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $3,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors: 9 Periods 10 Perio

Zapatera Enterprises: Compound interest, present value, annuity

4-1A. (Financial forecasting) Zapatera Enterprises is evaluating its financing requirements for the coming year. The firm has only been in business for one year, but its Chief Financial Officer predicts that the firm's operating expenses, current assets, net fixed assets, and current liabilities will remain at their current p

Issue price of the bonds

On January 1, 2010, Lowry Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31. The bonds were sold to yield 10%. Table values are: Present value of 1 for 10 periods at 8% 0.46319 Present value of 1 for 20 periods at 4% 0.

Annual Payment

A $150,000 loan from First State Bank of Poplar Bluff carries an annual percentage rate of 12%. It will be paid off through equal year-end installments, including both principal and interest, over a 20-year period. What is the annual payment required?

Three rules of time travel

A What is the present value of $10000 received a. Twelve years from today when interest rate is 4% per year b. Twenty years from today when the interest rate is 8% per year c. Six years from today when the interest rate is 2% per year B What is the present value of $1000 paid at the end of each of the next 100

Retirement Savings Plan: Annuity Calculations for the Amount to Save

You are saving for retirement. To live comfortably, you decide you will need to save $2 million by the time you are 65. Today is your 30th birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you wil put same amount into a savings account. If the interest rate is

Rule of 72; tax consequence of new copy machine purchase

If you want to determine how much you will have in a retirement account if you place a specific payment (the annuity) into an account at the end of each period of time (a month or a year), you would use the ______ formula. A. future value of an ordinary annuity B. future value of an annuity due C. present value of an ord

Budgeting & Forecasting

You have just won the lottery and just elected to receive $50,000 per year for 20 years. Assume that a 4 percent interest rate is used to evaluate the annuity and that you receive each payment at the beginning of the year. a) What is the present value of the lottery? b) How much interest is earned on the present value to make

Finance: Cash management, value of bonds, compute bond price, annuity payment

1. A company has collection centers across the country to speed up collections. The company also makes its disbursements from remote disbursement centers. The collection time has been reduced by two days and disbursement time increased by one day because of these policies. Excess funds are being invested in short-term instrument

Time Value of Money, opportunity cost of capital, interest rate factor

Please see the attached file for details. A. Suppose the opportunity cost of capital is 6% and you have just won a $2 million lottery that entitles you to $200,000 at the end of each year for the next 10 years. 1. What is the minimum lump sum cash payment you would be willing to take now in lieu of the 10-year annuity?