4. Present value Finding a present value is the reverse of finding a future value. is the process of calculating the present value of a cash flow or a series of cash flows to be received in the future. Which of the following investments that pay will $10,500 in 13 years will have a lower price today? The security that earns an interest rate of 21.75%. O The security that earns an interest rate of 14.50%. Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 13.80%. Assuming that both investments have equal risk and Eric's investment time horizon is flexible, which of the following investment options will exhibit the lower price?
Q: An investment that earns intrest: Any amount deposited does not earn interest for the first month…
A: Value in July is $2,000 To Find: Value of P
Q: Company A B C D PE Ratio 22.50 24.20 20.00 60.00
A: The right statical tool to determine an aggregate is mean. Mean is calculated by taking the sum of…
Q: 0.Analyze the relationship between the federal budget and national debt. Explain how a federal…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Danno is trying to decide which of two bonds to buy. Bond H is a 10 percent coupon, 10-year…
A: 1) Bond H's Coupon rate (i,e 10%) is equal to its Yield to maturity( market requried return i,e…
Q: Upon the birth of their first child, a couple deposited $5000 in an account that pays 8% interest…
A: Information Provided: Interest rate = 8% compounded continuously Amount deposited = $5000 Period of…
Q: sing the sum-of-the-years’-digits method, find the denominator of the depreciation rates for an asset…
A: There are many methods of doing depreciation depending on the choice and types of machine the…
Q: Joyce has never invested in shares before. She has come to you, as a prospective finance graduate,…
A: We have to find the value per share under dividend scenarios of dividend and growth rate. We will…
Q: 6. Collecting of receivables and liquidation of assets concerns: Sources of funds; Uses of funds;…
A: Sources of funds are vital to keep growing your business. It is about needing funds for business…
Q: counts Receivables ventory tal Current Asset tal Net Fixed Assets tal Assets 0 0 0 1422 61 Total…
A: Balance sheet shows the overall position of the firm in terms of assets and liabilities and equity…
Q: 1. Write the Ratio/ Equation to be used, IF REQUIRED 2. Substitute the given 3. Solution (Solve for…
A: Ratio to be used is given below: Profit Margin %=Net incomeSales×100 Return on Asset %= Net…
Q: How did it become 0.04768?
A: Here, To Find: Future value of loan =? Equal amount paid after every six months =?
Q: At a recent company meeting, Geraldine Erwin, sales manager of Dastoria, a flavored-beverage…
A: Value of sales today is calculated using following equation Value of sales today = Sales six months…
Q: ou estimate that your cattle farm will generate $1 million of profits on sales of $5.7 million under…
A: Earnings before interest and taxes (EBIT), supposing all other variables remain equal, are more…
Q: b) Suppose you have purchased some GameStop shares on margin at $5 per share. You ask your broker to…
A: i) Given, Limit sell order = $7 Stop loss order = $4.50 if the share price falls to $4.50, as per…
Q: A house costs $148,000. It is to be paid off in exactly ten years, with monthly payments of…
A:
Q: Integrative: Complete investment decision With the market price of gold at C$1,562.50 per ounce (CS…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: You have just sold your house for $1,100,000 in cash. Your mortgage was originally a 30-year…
A: Given, Value of house $700,000 Rate is 5.25%Term is 30 years
Q: Find the numerical value of the factor (A/P, 30%,22).
A: We have; Capital Recovery function (A/P,30%,22) To Find: Numerical Value of the Function
Q: Hak Young has accumulated some credit card debt while he was in college. His total debt is now…
A: Minimum monthly payment is calculated using following equation Periodic payment = PV×r1-1(1+r)n…
Q: Building Investment. A company purchased a building five years ago for $100,000. Its annual…
A: The Net Present Value: The net present value is a widely used tool to evaluate a prospective…
Q: 7. Assume that today you made an initial deposit in the amount of $16,000 into a savings account…
A: Future value of an initial deposit paying simple interest is calculated using following equation…
Q: Taxes are costs, and, therefore, changes in tax rates can affect consumer prices, project lives, and…
A: Net present value is the difference between the present value of cash inflows and initial…
Q: On January 1, 2021 Granger Company's beginning inventory was 400,000. In 2021, Granger Company…
A: Given: Beginning inventory = 400,000 Purchased goods = 1,900,000 Closing inventory =500,000
Q: compounded annually, and 11.0% APR compounded daily. Compute the EAR for each investiment choice…
A: Information Provided: Investment 1 rate = 11.6% compounded monthly Investment 2 rate = 11.6%…
Q: Accounting practice in the United States follows the generally accepted accounting principles (GAAP)…
A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…
Q: • Assume each widget will cost $10.00 each to produce and the selling price will be $18.00.…
A: The Net Present Value: The net present value is a popular capital budgeting technique that attempts…
Q: (Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 15 years has a $1,000 par value.…
A: Par Value $ 1,000.00 Time Period 15 Coupon rate 12% Yield 17%
Q: A survey of 480 households in a certain area yielded this data concerning their housing situation.…
A: Given, Total number of households is 480
Q: A company currently pays a dividend of $3.2 per share (D0 = $3.2). It is estimated that the…
A: Given,
Q: In 2016 Beth purchased a 10-year, 3.20% p.a. semi-annual paying coupon bond with a Face Value (FV)…
A: If beth decides to sell the long-term bond, then here are some advantages of short-term debt…
Q: A mechanical device will cost $30,000 when purchased. Maintenance will cost $2,000 each year. The…
A: The concept of time value of money will be used here. As per the concept of time value of money the…
Q: 1. Basic concepts Finance, or financial management, requires the knowledge and precise use of the…
A: The core principle of finance is the time value of money. Time value of money means sum of money in…
Q: oal Seek is limited to a single parameter. Group of answer choices True False
A: Goal seek works only on a single parameter but it can used on multiple cells. If there are multiple…
Q: A 6 month Treasury bill is currently yielding 0.15 percent.A BBB-rated bond with similar term is…
A: 6 month treasury bill Current yield – 0.15% Similar bond yield – 18.24% Expected loss in case of…
Q: A) Inflation rate; B) Interest rate; C) Not doing something; 2. People prefer to receive cash: A)…
A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…
Q: LTD company issued ten-year bond two years ago with a coupon interest of 13% paid every six-month,…
A: To calculate the price of bond we will use the below formula Price of bond =…
Q: Given i(4) = 3.150%, find the equivalent effective bi-weekly rate. O a. 0.11592% O b. 0.11954% O c.…
A: Interest rate (r) = 3.15% Number of compounding in a year (n)= 4 Effective annual rate =…
Q: What is the total future value ten years from now of $400 received in 1 year, $350 received in 2…
A: Future value of a present amount With present value (PV), annual interest rate (r) and period (n),…
Q: Kindly analyze the stock performance
A: Data given: 52 Week High=22.70 52 Week Low=18.00
Q: The unpaid balance at the start of a 30-day billing cycle was $600.91. No purchases were made during…
A: Unpaid balance on the card is the balance outstanding which is yet to be paid to the credit card…
Q: A firm has the following balances on the balance sheet: 2021 190,820 60,970 30,920 Net fixed assets…
A: Given, Sales of $1,500,000 Costs $905,000 Depreciation is $45000
Q: General Electric has just issued a callable (at par) 10-year, 5.7% coupon bond with annual coupon…
A: Annual Coupon rate is 5.7% Time period is 10 years Curret Price of Bond is $102.43 Callable at par…
Q: Toyota just issued ten-year bonds that make annual coupon payments of R50. Suppose you purchased one…
A: Here, To Find: New price of the bond =?
Q: Felix is keen to apply his finance knowledge to his real-life investment goals. He is currently 19…
A: Present Value: The present value (PV) is the present sum of a series of fixed payments. The series…
Q: Determine possible applications for self-service kiosks, ATMs, and point-of-sale terminals. List ATM…
A: Given: The application in ATM is self-service kiosks, point of sale terminal. To define the ATM…
Q: Currently, your credit card has a balance of $14,000. The credit card has an effective monthly…
A: The number of monthly payments may be calculated through following formula Present value =…
Q: Matterhorn Corporation stock currently sells for $80 per share. The market requires a return of 9.8…
A: The current price of stock is $80 per share Required rate of return is 9.8% Growth rate is 2.9%
Q: Chamberlain Company wants to issue new 18-year bonds for some much-needed expansion projects. The…
A: Given, Par value of bond is $1000 Term is 18 years Coupon rate is 9.8%
Q: answer using TVM calculations and formulas Today Dante and Sharon had their first child. All of the…
A: Initial deposit (I) = $23,000 Monthly interest rate (r) = 0.00266666666666667 (i.e. 0.032 / 12)…
Q: The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3…
A: YTM means total rate of return that have been earned by the bond when all interest payments has been…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
- 4. Present value Finding a present value is the reverse of finding a future value. is the process of calculating the present value of a cash flow or a series of cash flows to be received in the future. Which of the following investments that pay will $19,000 in 14 years will have a higher price today? The security that earns an interest rate of 7.00%. The security that earns an interest rate of 10.50%. Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 9.60%. Assuming that both investments have equal risk and Eric’s investment time horizon is flexible, which of the following investment options will exhibit the lower price? An investment that matures in five years An investment that matures in six years Which of the following is true about present value calculations? Other things remaining equal, the present value of a…(Related to Checkpoint 5.6) (Solving for i) You are considering investing in a security that will pay you $1,000 in 25 years. a. If the appropriate discount rate is 11 percent, what is the present value of this investment? b. Assume these investments sell for $259 in return for which you receive $1,000 in 25 years. What is the rate of return investors earn on this investment if they buy it for $259? a. If the appropriate discount rate is 11 percent, the present value of this investment is $nothing. (Round to the nearest cent.)The present value represents the amount of money you would have to deposit today in order to match what you would get from the income stream at the future date. The formula is Time = M = i Future value represents the total amount of money you would have if you deposit the income stream until a future date. The formula is To start our problem we need to identify the variables. Rate =r= i Income Stream S(t) = i Present Value = years % M 1. 0 S (t) et dt. Future Value = Present Value* erM dollars/year
- An investor has to decide how much he will be willing to pay for an investment that generates the following stream of future cash flows: Yr1 = 35, Yr2 = 40, Yr3 = 45, Yr4 = 50, Yr5= 55. His minimum required rate of return is 9 percent. How much should he be willing to pay for it today?10. Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security of $4,000 will be worth $5,324.00 three years in the future, assuming that no additional deposits or withdrawals are made, what is the implied interest rate the investor will earn on the security? ○ 6.00% ○ 7.50% ○ 10.00% ○ 12.00% If an investment of $35,000 is earning an interest rate of 11.00% compounded annually, it will take value of $58,977.04-assuming that no additional deposits or withdrawals are made during this time. for this investment to grow to a Which of the following statements is true, assuming that no additional deposits or withdrawals are made? If you invest $1 today at 15% annual compound interest for 82.3753 years, you'll end up with approximately $100,000. ○ If you invest $5 today at 15% annual compound interest for 82.3753 years,…The amount of money originally put into an investment is known as the present value P of the investment. For example, if you buy a $50 U.S. Savings Bond that matures in 10 years, the present value of the investment is the amount of money you have to pay for the bond today. The value of the investment at some future time is known as the future value F. Thus, if you buy the savings bond mentioned above, its future value is $50. If the investment pays an interest rate of r (as a decimal) compounded yearly, and if we know the future value F for t years in the future, then the present value P = P(F, r, t), the amount we have to pay today, can be calculated using the formula below. P = F × 1 (1 + r)t We measure F and P in dollars. The term 1/(1 + r)t is known as the present value factor, or the discount rate, so the formula above can also be written as the following. P = F × discount rate (a) Explain what information the function P(F, r, t) gives you. The function…
- 4. Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security currently worth $5,600 will be worth $12,379.82 seven years in the future, what is the implied interest rate the investor will earn on the security—assuming that no additional deposits or withdrawals are made? 12.00% 4.52% 9.60% 0.32% If an investment of $35,000 is earning an interest rate of 4.00%, compounded annually, then it will take for this investment to reach a value of $44,286.17—assuming that no additional deposits or withdrawals are made during this time. Which of the following statements is true—assuming that no additional deposits or withdrawals are made? If you invest $1 today at 15% annual compound interest for 82.3753 years, you’ll end up with $100,000. If you invest $5 today at…5. Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security currently worth $2,000 will be worth $3,524.68 five years in the future, what is the implied interest rate the investor will earn on the security-assuming that no additional deposits or withdrawals are made? O 12.00% O 1.76% O 0.35% O 5.67% If an investment of $40,000 is earning an interest rate of 8.00%, compounded annually, then it will take for this investment to reach a value of $56,554.46-assuming that no aditional deposits or withdrawals are made during this time. Which of the following statements is true-assuming that no additional deposits or withdrawals are made? O If you invest $1 today at 15% annual compound interest for 82.3753 years, you'll end up with $100,000. O If you invest $5 today at 15% annual compound interest for 82.3753 years, you'll…5. Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security currently worth $9,200 will be worth $15,767.18 seven years in the future, what is the implied interest rate the investor will earn on the security-assuming that no additional deposits or withdrawals are made? O 8.00% O 5.83% 1.71% O 0.24% If an investment of $50,000 is earning an interest rate of 8.00%, compounded annually, then it will take a value of $89,052.92-assuming that no additional deposits or withdrawals are made during this time. Which of the following statements is true-assuming that no additional deposits or withdrawals are made? O If you invest $1 today at 15% annual compound interest for 82.3753 years, you'll end up with $100,000. O If you invest $5 today at 15% annual compound interest for 82.3753 years, you'll end up with $100,000. for…
- Suppose the risk - free interest rate is 4.2%.a. Having $200 today is equivalent to having what amount in one year?b. Having $200 in one year is equivalent to having what amount today?c. Which would you prefer, $200 today or $200 in one year? Does your answer depend on when you need the money? Why or why not?a. Having $200 today is equivalent to having what amount in one year?Having $200 today is equivalent to having Sin one year. (Round to the nearest cent.)Which of the following statements about the time value of money is true? a.) A dollar in hand today is worth less than a dollar to be received in the future. b. ) The value of a dollar invested at a positive interest rate decreases over time. c.) The further in the future you receive a dollar, the less it is worth today. d.)The higher the rate of interest, the more likely an investor will elect to consume at present and forgo invest his funds.10. Findingthe interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security of $12,000 will be worth $14,292.19 three years in the future, assuming that no additional deposits or withdrawals are made, what is the implied interest rate the investor will earn on the security? 4.50% 4.80% 6.00% 7.20% If an investment of $45,000 is earning an interest rate of 8.50% compounded annually, it will take for this investment to grow to a value of $79,656.40—assuming that no additional deposits or withdrawals are made during this time. Which of the following statements is true, assuming that no additional deposits or withdrawals are made? If you invest $5 today at 15% annual compound interest for 82.3753 years, you’ll end up with approximately $100,000. If you invest $1 today at 15%…