Explore BrainMass
Share

# Finance problems - Invested money compounded annually

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Can you help me get started with this assignment?

How much money is needed to invest today to have a lump sum of \$100,000 in 40 years if the interest rate is 12.5 percent compounded annually?

If \$100 is invested at the end of each month for 18 yrs into an account paying 10.5 percent compounded monthly, how much will your investment accumulate at the end of the 18 yrs?

A \$40,000,000 lottery win is to be paid out over 25 yrs with a payment of \$1,600,000 at the end of each year with an interest rate of 6 percent compounded annually. What lump sum today would equal the present value of this 25-year annuity?

If \$1,000 is invested today into an account earning 5.75 percent interest compounded monthly, how much is it worth in 10 yrs?

If \$20,000 is borrowed with an interest rate of 6.5 percent compounded monthly for 3-year (36 month) loan, how much is the monthly payment?

How much money is needed to invest today to have a lump sum of \$10,000 in 8 years if the available interest rate is 10 percent compounded monthly?

If \$50,000 is borrowed with an interest rate of 7.0 percent compounded monthly for a 5-year (60 month) loan, how much is the monthly payment?

If \$10,000 is invested today into an account earning 8.5 percent interest compounded monthly, how much is it worth in 5 yrs?

If \$250 is invested each month for 8 yrs into an account paying 6.5 percent compounded monthly, to what amount will your investment accumulate at the end of the 8 years?

#### Solution Summary

The solution computes present value, future value, annuity, monthly payment and investment which are compounded monthly.

\$2.19

## Finance

Which would you prefer?

a) An investment paying interest of 12% compounded annually.

b) An investment paying interest of 11.7% compounded semiannually.

c) An investment paying 11.5% compounded continuously.

Work out the value of each of these investment after 1,5, and 20 years.

2.You own a pipeline which will generate a \$2 million cash return over the coming year. The pipeline's operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oil shipped is declining, and cash flows are expected to decline by 4% per year. The discount rate is 10%.

a. What is the PV of the pipeline's cash flows if its cash flows are assumed to last forever?

b. What is the PV of the cash flows if the pipelines is scrapped after 20 years?

3. A 10-year German government bond (bund) has a face value of 100 and an annual coupon rate of 5%. Assume that the interest rate (in euros) is equal to 6% per year. What is the bond's PV?

4. Look again at problem 3. Suppose that the German bund paid interest semiannually like a U.S. bond. ( The bond would pay .025x100= 2.5 every six months). What's the PV in this case?

View Full Posting Details