Explore BrainMass

# Annuity

### Fin 320 Anna is willing to settle for an annuity that carries an interest rate assumption of 9%. What annual payment would be acceptable to her?

Anna Waldheim was seriously injured in an industrial accident. She sued the responsible parties and was awarded a judgment of \$2,000,000. Today, she and her attorney are attending a settlement conference with the defendants. The defendants have made an initial offer of \$156,000 per year for 25 years. Anna plans to counteroffer a

### 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?

### 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

### Loan amortization schedule, value of bonds, monthly payment amount, accept or reject

To expand its operation, International Tools Inc. has applied to the International Bank for a 3-year, \$3,500,000 loan. Prepare a loan amortization table assuming 10 percent rate of interest. Hewitt Packing Company has an issue of \$1,000 par value bonds with a 14 percent coupon interest rate outstanding. The issue pays inter

### 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

### Identify three relevant and three non-relevant costs in this decision: American Cancer Society ACS

Based on the information provided in the financial statement, how can I identify a decision that has recently been made or will be made in the near future in your organization or three relevant and three non-relevant costs in this decision? Is this information found in the financial statements? If you cannot identify specific

### Time value of money concepts: Ordinary annuity

!. You want to buy a car but you are \$5,000 short. If you invest \$2,350.00 at an annual interest rate of 12%, how long will it take you to purchase the car? 3. What is the future value of a 5-year ordinary annuity with annual payments of \$2500, evaluated at 15% interest rate?

### Finance: Annuities: Time Value of Money

Outflows Initial Investment now: \$235,000 End of year: 1: \$150,000 2: \$200,000 3: \$250,000 4: \$300,000 5: \$350,000 Inflows Initial investment now: \$------- End of Year: 1: \$200,000 2: \$250,000 3. \$300,000 4: \$450,000 5: \$500,000 1. Compute the NPV for all these cash flows. This should be a single amount. Use

### Cash Flow Stream of the State Lottery

A person wins \$1 million in the state lottery. Actually, the person receives \$50,000 per year for 20 years. The present value of this is considerably less than \$1 million. Using a 10% discount rate, what is the duration of this cash flow stream?

### 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

### Calculate the car loan's monthly payment and EAR

You want to buy a car, and a local bank will lend you \$20,000. The loan will be fully amortized over 5 years ( 60 months), and the nominal interest rate will be 12% with interest paid monthly. What will be the monthly loan payment? What will be the loan's EAR?

### 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

### Compute amount of withdrawal beginning in 35 years.

I am planning to save 3000 per year and my first deposit will be made next year. I am going to invest in a mutual fund which will return 10% per year. I am going to retire in 35 years and will live live for another 30 years after I retire. My first withdrawal will be in 35 years. How much can I spend each year after I retire

### Calculate the carrying amount of a bond

A company issues \$100,000 of semiannual 10-year, 8% bonds sold to yield 10% Present value of \$1.00 at 5% for 20 periods 0.3769 Present value of \$1.00 at 8% for 10 periods 0.4632 Present value of ordinary annuity of \$1.00 @ 5% for 20 periods 12.462 Present value of ordinary annuity of \$1.00 @ 8% for 10 periods 6.710

### 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.

### Present value of annuity...

The company is assessing the employees fund. At the end of each of the next 25 years the company will have to pay its retirees 5,432. If the fund is estimated to earn 2%, how much does the company need to have set aside today to ensure that it can meet its future obligations? (At the end of the 25th year, the balance should be d

### Annual deposit for a sinking fund

My company had establish a sinking fund for its outstanding preferred stock issue. \$543,219,876 is the total amount that will be retired in 26 years. At the beginning of each of these 26 years, My company will deposit and equal amount into an account that will earns 4%. What is the value of this periodic deposit? Show Computati

### TVM

After a protracted legal case, Joe won a settlement that will pay him \$11,000 each year at the end of the year for the next ten years. If the market interest rates are currently 5%, exactly how much should the court invest today, assuming end of year payments, so there will be nothing left in the account after the final payment

### Sharon Smith's Annuity: What is Market Price of Stock?

1. An issue of common stock has just paid a dividend of \$3.75. Its growth rate is 8%. What is its price if the market's rate of return is 16%? (Show all work/calculations/formulas) 2. Sharon Smith will receive \$1 million in 50 years. The discount rate is 14. As an alternative, she can receive \$2,000 today. Which should she c