Purchase Solution

If you invest $9,000 today, how much will you have

Not what you're looking for?

Ask Custom Question

Complete the following Problems from Foundations of Financial Management (11th ed.)
Stanley B. Block and Geoffrey A. Hirt
Irwin/McGraw-Hill, 2005
Burr Ridge, IL

Chapter 9

3.
If you invest $9,000 today, how much will you have:
a. In 2 years at 9 percent?
b. In 7 years at 12 percent?
c. In 25 years at 14 percent?
d. In 25 years at 14 percent (compounded semiannually)?

5.
How much would you have to invest today to receive:
a. $15,000 in 8 years at 10 percent?
b. $20,000 in 12 years at 13 percent?
c. $6,000 each year for 10 years at 9 percent?
d. $50,000 each year for 50 years at 7 percent?

6.
If you invest $2,000 a year in a retirement account, how much will you have:
a. In 5 years at 6 percent?
b. In 20 years at 10 percent?
c. In 40 years at 12 percent?

17.
Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year; $2.20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the end of the third year he will be able to sell the stock for $33. What is the present value of all future benefits if a discount rate of 11 percent is applied? (Round all values to two places to the right of the decimal point.)

Chapter 10

2.
Midland Oil has $1,000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is:
a. 7 percent.
b. 10 percent.
c. 13 percent.

19.
North Pole Cruise Lines issued preferred stock many years ago. It carries a fixed dividend of $6 per share. With the passage of time, yields have soared from the original 6 percent to 14 percent (yield is the same as required rate of return).
a. What was the original issue price?
b. What is the current value of this preferred stock?
c. If the yield on the Standard & Poor's Preferred Stock Index declines, how will the price of the preferred stock be affected?

24.
Friedman Steel Company will pay a dividend of $1.50 per share in the next 12 months (D1). The required rate of return (Ke) is 10 percent and the constant growth rate is 5 percent.
a. Compute P0.
(For parts b, c, and d in this problem all variables remain the same except the one specifically changed. Each question is independent of the others.)
b. Assume Ke, the required rate of return, goes up to 12 percent; what will be the new value of P0?
c. Assume the growth rate (g) goes up to 7 percent; what will be the new value of P0?
d. Assume D1 is $2, what will be the new value of P0?

Purchase this Solution
Solution Summary

783 words explain how to find the return on an investment in 2 years time.

Solution Preview

For all the calculations see the attached excel files.

2)Say you invest $9,000 today, how much will you have: P=present value, F= Future value r= rate of interest n=duration
F=P*(1+r)^n

a. In 2 years at 9 percent? 10692.90 3967.50

b. In 7 years at 12 percent? 19896.13

c. In 25 years at 14 percent? 238157.24

d. In 25 years at 14 percent (compounded semiannually)? 265113.23 Here r will be divided by half and duration will be multiplied by 2 as
there is compounding semiannually

3)How much would you have to invest today to receive:

P=present value, F= Future value r= rate of interest n=duration
P=F/(1+r)^n

a. $15,000 in 8 years at 10 percent? 6997.61

b. $20,000 in 12 years at 13 percent? 4614.12

Here we have to find out the present value of annuity
P=A*((1/r)-((1/(r*((1+r)^n)))
P=present value, A= Annuity r= rate of interest n=duration

By excel function
c. $6,000 each year for 10 years at 9 percent? 38505.95 ($38,505.95)

d. $50,000 each year for 50 years at 7 percent? 690037.31 ($690,037.31)

4)If you invest $2,000 a year in a retirement account, how much would you have:
Here we have to find out the compounded value of annuity
F=A*((1+r)^n-1)/r
F=Future value, ...

Purchase this Solution
Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

View More Free Quizzes
Related BrainMass Solutions

  • Present value

    2) Say you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? b. In 7 years at 12 percent? c. In 25 years at 14 percent? d. In 25 years at 14 percent (compounded semiannually)?

  • Question about future value of money

    Important formulae F.V.= P.V (1+I)^n Fv= future value P.V.= present value, I= interest rate n= duration If you invest $9,000 today, how much will you have: a.

  • Future Value. If you invest 9,000 today, how much will have?

    123210 Future and Present Value Future Value If you invest 9,000 today, how much will have: a. in 2 years at 9 percent? b. In 7 years at 12 percent? c. In 25 years at 14 percent? d. In 25 years at 14 percent (compounded semiannually)?

  • Questions about Present and Future Value

    Future Value If you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? b. In 7 years at 12 percent? c. In 25 years at 14 percent? d. In 25 years at 14 percent (compounded semiannually) 2.

  • Future Value at different discount rates

    how to figure that. If I invest $9,000 today how do I calculate how much I will have in 2years at 9% ? and in 7 years at 12%?

  • You will receive $5,000 three years from now. The discount r

    If you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? b. In 7 years at 12 percent? c. In 25 years at 14 percent? d. In 25 years at 14 percent (compounded semiannually)?

  • Price of Bonds

    What is the present value of: (a) $9,000 in 7 years at 8 percent 2. If you invest $9,000 today , how much will you have : (a) In 2 years at 9 percent (d) In 25 years at 14 percent (compounded semi-annually) 3.

  • Future Value

    132640 Future Value (Step by step how to calculate compounding interest) If you invest $9,000 today, how much will you have in 25 years at 14 percent (compounded semiannually)?

  • Finding present and future values

    If you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? FV=PV*FV factor =9000*FV factor (i=9%, n=2) =9000* 1.188=$10692 b. In 7 years at 12 percent?

  • Time value of money computations

    **Please show all the work, I tried to do it but I am not sure if what I did is right. 1)Say you invest $9,000 today, how much will you have: P=present value, F= Future value i= rate of interest n=duration F=P*(1+i)^n a.

View More Related Solutions