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Annuity

Annuities, present values, future values

4.3 Calculate the following values, assuming a discount rate of 8%: a. present value of a perpetuity (also called a perpetual annuity) of $50 received each year at the end of each year b. present value of an annuity of $50 received at the end of each year for 5 years c. present value of an annuity of $50 received at

Finance involving depreciation and maximum before tax payment

1. Your firm wants to lease a $500,000 piece of equipment. The equipment has a 5-year life and a salvage value of $100,000 at the end of year 5. Depreciation is straight-line over 5 years to a zero book value. There will be 5 pre-paid lease payments on the equipment. Purchasing the asset has a positive NPV for your firm. Ass

Deer Valley: After-Tax NPV, Etc.

Consider the following scenario: Deer Valley Lodge, a ski resort in the Wasatch Mountains of Utah, has plans to eventually add five new chairlifts. Suppose that one lift costs $2 million, and preparing the slope and installing the lift costs another $1.3 million. The lift will allow 300 additional skiers on the slopes, but the

Future Value to Retire in 25 Years

Assuming you can earn 11% a year on your 401k money over the next 25 years, how much will you need to save every year to reach your retirement goal in 25 years? Interest Rate (Rate): 11% Number of years: 25 Annual withdrawals amount (PMT) -50,250.67

Finance- Retirement Plan

You are earning a salary of 30,000. You plan on retiring in 25 years. At the beginning of retirement you would like to have accumulated enough money in your 401k plan to receive an annuity for 20 years equal to 80% of your last years' salary. 1. If you assume that your raises will just match the inflation rate (estimated 3% a

Amount of equipment, accumulated depreciation, lease payables

Quattro Corporation signed a lease from Cinco Leasing Company of July 1, 20X3, for equipment having a five-year useful life. The lease does not include any option to purchase the equipment at the end of the four-year lease term, nor does it include a provision for ownership transfer. Five equal payments of $10,000 per year are r

Basic Concepts in Finance: Time Value of Money

See attached for better formatting. Q5-7 DR. FRANKENSTEIN IS CONSIDERING BUILDING A PORTFOLIO CONTAINING TWO ASSETS, S AND G. ASSET S WILL REPRESENT 70% OF THE DOLLAR VALUE OF THE PORTFOLIO, AND ASSET G WILL REPRESENT THE REMAINING 30%. THE EXPECTED RETURNS OVER THE NEXT 5 YEARS 2001-2005, FOR EACH OF THESE ASSETS IS SHOWN

Computing Present Value of Annuity: Example Problems

1. Barb and John Reed want to know how much they must deposit in a retirement savings account today to have payments of $1,750 every six months for 15 years. The retirement account is paying 8% annual interest, compounded semiannually. Answer: 2. Lena Dimock is saving for her college expenses. She sets aside $200 at the

Compute future value of seperate annuity

3. Another client, Wynona, decides that she will invest $5,000 per year in a 6% annuity for the first ten years, then $6,000 for the next ten years, and then $4,000 per year for the last ten years, how much will she accumulate? [Hint: Treat each ten-year period as as separate annuity and compute the Future Value. After the

Time value of money: Accumulate future sums; create a retirement fund

P1 Deposits to accumulate future sums. For each of the cases shown in the following table, determine the amount of equal, annual, end of year deposits necessary to accumulate the given sum at the end of specified period, assuming stated annual interest rate. Case Sum to be Accumulation

Time Value of Money: Lottery Winnings, Home Shopping, Roth IRA

1. You won the lottery and will receive $50,000 per yr for 20 yrs. Assume 4% interest used to evaluate annuity and you receive pymt at the begining of the yr a. what is the PV of the lottery b/ how much interest was earned on the PV to make $50,000 a year pymt. 2. You are shopping for a new home. You have a choice of financi

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

Annuity due

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 you 65th birthday, that you will put the same amount into a savings account. if the interest rate

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

Retirement Calculation in Excel: Future value of annuity payments for 40 years

Calculate the following: An employee works at the local hamburger restaurant for 40 years and never earns more than minimum wage, which is $12,000 a year. However, this employee is able to save 6%, or $720, per year. Over the 40-year period, the employee's investments average 8% interest per year. 1. How much will the e

Investments

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

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% per year for the next five years. He will take the proceeds and provide himself with a 10 year annuity. Assuming a 12% interest rate, how much will this annuity be?

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

Rate of return / PV and FV of annuity

(Rate of return) After graduation, Adrian moved across the country to Brownville and bought a small house for $208,000. Bill moved to Columbus and bought a house for $195,000. Four years later, they both sold their houses. Adrian netted $256,000 when she sold her house and Bill netted $168,000 on his. 1. What annual rate of

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

P16

See attached Present Value of $1 Discount Rate Present Value of an Annuity of $1 Discount Rate Periods 8% 10% 8% 10% 5 .6806 .6209 3.9927 3.7908 7 .5835 .5132 5.2064 4.8684 9 .5002 .4241 6.2469 5.7590 Psyche Company wants to acquire Trim Company. Trim's ROI has be

P15

See Attached Present Value of $1 Discount Rate Present Value of an Annuity of $1 Discount Rate Periods 8% 10% 8% 10% 5 .6806 .6209 3.9927 3.7908 7 .5835 .5132 5.2064 4.8684 9 .5002 .4241 6.2469 5.7590 A particular common stock has an annual cash dividend of $2.00

Property Valuation by Income Approach

A piece of rental property will generate $10,000, a year for five years, $12,000 for the next five years, and then be sold at the end of the tenth year for $100,000. If you can earn 10 percent on your funds, what is the maximum you should pay for the property?