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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?

F-16: Compute net present value for each piece of equipment; evaluate investment

Please see the attachment. A company is trying to decide which of two new product lines to introduce in the coming year. The company requires a 12% return on investment. The predicted revenue and cost data for each product line follows (see attachment). The company has a 30% tax rate and it uses the straight-line depreciat

Annuities, Perpetuity, Savings Account, Bonds

30. Your brother has offered to give you $100, starting next year, and after that growing at 3% for the next 20 years. You would like to calculate the value of this offer by calculating how much money you would need to deposit in the local bank so that the account will generate the same cash flows as he is offering you. Your

Acctg, Assignment

1. The CEO of a highly profitable company, noticing that the excess cash not needed to fund business operations has accumulated in a company bank account that pays no interest, contemplates declaring and paying a cash dividend to common shareholders before year's end. The likely effect of paying the dividend would be to A. ha

Intermediate accounting

Sandy Shores inc plans to make four annual deposits of 5000.00 each to a special fund at the beach museum. The fund assets will be invested and the expected rate of return will be 8%. Using the appropriate tabels determine how much will be accumulated in teh fund on December 31, 2012 under each of the following situations: A

Corporate Finance

A corporation has decided to provide a pension for a key employee who is scheduled to retire in 12 years (assume that today is January 1, 2000 and the employee will start their retirement on January 1, 2012). This pension is to provide a 20-year annuity for the employee with annual end-of-year payments of $65,000, with the first

Financial Management

You are considering investing in a bank account that pays a nominal annual rate of 6.9 percent, compounded monthly. If you invest $3,000 at the end of each month, how many months will it take for your account to grow to $150,000?

Monthly and Annual Payments

Please address the following questions: 1. What is the future value of a 5 year ordinary annuity with annual payments of $200 evaluated at a 15% interest rate? 2. You have just taken out an installment loan for $100,000. Assume that the loan will be repaid in 12 equal monthly installments of $9,456 and the first monthly


Your uncle is about to retire, and he wants to buy an annuity that will provide him with $73,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 5.25%. How much would it cost him to buy the annuity today?


Sam was injured in an accident, and the insurance company has offered him the choice of $49,000 per year for 15 years, with the first payment being made today, or a lump sum. If a fair return is 7.5%, how large must the lump sum be to leave him as well off financially as with the annuity?

General Accounting

Use the following information for questions 1 and 2. The following information was available from the inventory records of Rich Company for January: Units Unit Cost Total Cost Balance at January 1 3,000 $9.77 $29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2,700 10.71 28,917 Sales: January

Valuing Bonds Using Present Value

Please help! Using the attachments for detail, can you help me with this question and any on the attached JPG files? Use the present value tables in the appendix (files attached) on the future value and present value tables to calculate the issue price of a $600,000 bond issue in each of the following independent cases. Assum

Compound interest vs annuity: Calculations for option 1 and 2. Which is better?

As a financial planner a client comes to you for investment advice. After meeting with him and understanding his needs, you offer him the following two investment options: Option 1: Invest $20,500 in a savings account at 5.4% interest compounded quarterly. Option 2: Invest into an ordinary annuity where $4,500 is deposi

BUS MATH: 15 ordinary annuity and annuity due problems

1. $111,834 is the amount of an ordinary annuity of $6,000 for 4 years at 8% compounded quarterly. () True False 2. The monthly payment of rent is an example of a renter's annuity. () True False 3. A contingent annuity has a specific number of payment periods. () True F

RAP Manufacturing: Compute PV of cash flows for existing and new CAM system

See attached format. RAP Manufacturing, Inc. produces microwave ovens, electric ranges, and freezers. Due to increasing competition, President Bob Pearson is considering investing in a computer-aided manufacturing (CAM) system. The company's microwave plant has been selected for initial evaluation. The CAM system for the m

Numerous Present and Future Value Problems

3.19 How much money was deposited each year for 5 years if the account is now worth $100,000 and the last deposit was made 10 years ago? Assume the account earned interest at 7% per year. 4.11 What nominal interest rate per year is equivalent to an effective 16% per year compounded semiannually? 4.17 Depos

Financial Analysis - Time Value

I need you help with the attached problem sets. Week 2 Problem Set Problems Suppose that you observe the following term structure for Treasury securities: Term to Maturity (Year) Interest Rates (%) 1 12.00% 2 11.75 3 11.25 4 10.00 5 9.25 a. Calculate the forward rates for year 1,2,3,4, and 5. b. Use this informati

Calculate PV, FV and annual amounts of annuity payments

If I borrow 60,000 from the bank at 10% interest over the seven-year life of the loan, what equal annual payments must be made to discharge the loan plus pay the bank its required rate of interest. Annual payments_____. How much of this first payment will be applied to interest? to principal? Also how much of my second payment

Please help with accounting study questions

1. The accountant's primary function is A) evaluating the financial statements. B) making decisions based on financial data. C) the collection and presentation of financial data. D) planning cash flows. 2. A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each asset costs $35,000 and is exp

Calculate FV of deposits, annuities, amortize payments, rate of return, EVA

1- You want to go to grad school 3 years from now, and you can save $5,000 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 9% per year. Under these conditions, how much will you have just after you make the 3rd deposit, 3 years from now? 2- You want to go to g


5-1 How long will it take $ 200 to double if it earns the following rates? Compounding occurs once a year. 5-2 Find the present values of these ordinary annuities. Discounting occurs once a year. a. $ 400 per year for 10 years at 10% b. $ 200 per year for 5 years at 5% c. $ 400 per year for 5 years at 0% d. Rework Par

1. In determining the future value of a single amount

Please look over these questions for me and let know which one is wrong and show work. SEE ATTACHMENT 1. In determining the future value of a single amount, one measures A. the future value of periodic payments at a given interest rate. B. the present value of an amount discounted at a given interest rate. C. the futu

General Mills will receive $27,500 a year

1. General Mills will receive $27,500 a year for the next 10 years as a payment for a weapon he invented. If a 12 percent rate is applied, should he be willing to sell out his future rights now for $160,000? 2. Determine the amount of money in a saving account at the end of five years, given an initial deposit of $3, 000 an

7 annuity payments problems

1. As stated in the chapter, annuity payments are assumed to come at the end of each payment period (termed an ordinary annuity). However, an exception occurs when the annuity payments come in the beginning of each period (termed an annuity due). To find the present value of an annuity due, subtract 1 from n an add 1 to the ta

Carrie Tune, Mr Flint, Cousin Bertha Word Problems: annuity values, PV, FV

1. Carrie Tune will receive $19,500 a year for the next 20 years as a result of the new song she has written. If a 10 percent rate is applied, should she be willing to sell out her future rights now for $160,000? 2. At a growth (interest) rate of 8 percent annually, how long will it take for a sum to double? To triple? Selec