FinanceQuestions - Part 1

I need answer of this question solution general finance

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…

An investor is considering the purchase of a financial instrument that promises to make the following payments: Promised Payment by Issuer $100 $100 $100 $100 $1,100 Years from Now 1 2 3 4 5 This financial instrument is selling for $1,243.83. Assume that the investor wants a 6.25% annual interest rate on this investment. Should the investor purchase this investment? OA. Yes, the financial instrument is attractive O B. No, the financial instrument is unattractive. C. Can't be answered. More information is needed to answer the question D. Indifferent.

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(Solving for i​) You are considering investing in a security that will pay you ​$5,000 in 31 years.  a. If the appropriate discount rate is 11 percent,​ what is the present value of this investment? ​(Round to the nearest​ cent.) b. Assume these investments sell for ​$1,680 in return for which you receive ​$5,000 in 31 years. What is the rate of return investors earn on this investment if they buy it for ​$1,680​?

Exploring Finance: Short-Term versus Long-Term Cash Flows.  Short-Term versus Long-Term Cash Flows Conceptual Overview: Explore how time and the cost of capital affects the net present values of two alternative investments. The equations below show the discounted or present value of cash flows either one year or twenty years in the future. The first equation in each set of three shows the discounted value when the interest rate (or cost of capital) equals 5%. The second equation in each set of three shows the discounted value for an interest rate that is controlled by the slider. The third equation compares the two discounted values. Change the slider and observe whether the discounted value of the one-year cash flow changes more or less quickly than the discounted value of the twenty-year cash flow. 1.  What is the percentage change in the PV of $100 due in 1 year when the interest rate changes from 5% to 10%? (Move the slider to 10%.) Decreases by 60.6% Decreases by 4.33%…

Which of the following investments has a higher present value, assuming the same (strictly positive) interest rate applies to both investments? Investment X Investment Y $5,000 $7,000 $9,000 $11,000 Year 1 $11,000 $9,000 $7,000 $5,000 2 3 4 Select one: a. Investment X has a higher present value. b. Investment Y has a higher present value. c. Investment X and Investment Y have the same present value, since the total of the cash flows is the same for both d. No comparison can be made-we need to know the interest rate to calculate the present value

Topic 2: Return measures2. Which of the following investments do you prefer?(a) Purchase a zero-coupon bond, which pays $1000 in ten years, for a price of $550.(b) Invest $550 for ten years in a bank savings account at a guaranteed annual interestrate of 5.5%.1

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What is the value of this investment on these financial accounting question?

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​(Related to Checkpoint​ 5.6) ​ (Solving for i​) You are considering investing in a security that will pay you ​$1,000 in 27 years.   a.  If the appropriate discount rate is 12 percent​, what is the present value of this​ investment? b.  Assume these investments sell for ​$515 in return for which you receive ​$1,000 in 27 years. What is the rate of return investors earn on this investment if they buy it for ​$515​? a.  If the appropriate discount rate is 12 ​percent, the present value of this investment is ​$nothing. ​(Round to the nearest​ cent.)

(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.)

Problem ▪ You are considering investing $1,000 in a savings bond that will pay $1,210 in 2 years. What is the interest rate?

What would be the proper key strokes on the BA II Plus Financial Calculator by Texas Instrument for the below response?

(Related to Checkpoint 5.6) (Solving for ) You are considering investing in a security that will pay you $4,000 in 28 years a. If the appropriate discount rate is 12 percent, what is the present value of this investment? b. Assume these investments sell for $2,229 in return for which you receive $4,000 in 28 years. What is the rate of return investors earn on this investment if they buy it for $2,229?

(Related to Checkpoint 5.6) (Solving for ) You are considering investing in a security that will pay you $3,000 in 34 years. a. If the appropriate discount rate is 8 percent, what is the present value of this investment? b. Assume these investments sell for $773 in return for which you receive $3,000 in 34 years. What is the rate of return investors earn on this investment if they buy it for $773? a. If the appropriate discount rate is 8 percent, the present value of this investment is $ 219.13. (Round to the nearest cent.) b. The rate of return investors can earn on this investment if they buy it for $773 is %. (Round to two decimal places.)

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What is the value of this investment for these financial accounting question?

This is part a) question and it's answer in order to answer part b) question Question: You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? answer : According to the question we need to calculate the current price of the perpetual consol. Perpetual consoles are priced differently because their expected income is spread through an indefinite period. So, perpetual consoles are priced using the current yield.  The current yield is calculated as:- coupon amountMarket price×100coupon amountMarket price×100 After calculating the current yield price is calculated by the above formula where, i = Current interest rate  y = yield so, the price of this consol will be  Price = i/y I please need the solutions for part b)  question b)  In the next period however, the interest rate changes unexpectedly to i . What is the new price of the bond? If…

(Related to Checkpoint 5.6) (Solving for i) You are considering investing in a security that will pay you $4,000 in 26 years. a. If the appropriate discount rate is 12 percent, what is the present value of this investment? b. Assume these investments sell for $2,348 in return for which you receive $4,000 in 26 years. What is the rate of return investors earn on this investment if they buy it for $2,348? a. If the appropriate discount rate is 12 percent, the present value of this investment is $ (Round to the nearest cent.)

(Related to Checkpoint 5.6) (Solving for) You are considering investing in a security that will pay you $4,000 in 31 years. a. If the appropriate discount rate is 10 percent, what is the present value of this investment? b. Assume these investments sell for $2,062 in return for which you receive $4,000 in 31 years. What is the rate of return investors earn on this investment if they buy it for $2,062? C a. If the appropriate discount rate is 10 percent, the present value of this investment is $. (Round to the nearest cent.)

Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 16 years. Assume you purchase a bond that costs $75. a. What is the exact rate of return you would earn if you held the bond for 16 years until b. If you purchased the bond for $75 in 2017 at the then current interest rate of.21 c. In 2025, instead of cashing in the bond for its then current value, you decide to hold it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) percent year, how much would the bond be worth in 2025? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) the bond until it doubles in face value in 2033. What annual rate of return will you earn over the last 8 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,e.g..32.16.) a. Rate of return b. Value of bond c. Rate…