1. A security pays you an annual amount of $900 for 10 years. The seller of the security requiresthe first payment to be made today and the last payment to be made 9 years from today.Interest rate on this security is 5.75 percent per annum. Calculate the present value rounded to2 decimal places.2. An investment promises to pay into an account that pays you 6 percent annually, $150 permonth for the next twenty-two years. Suppose the first deposit into the account is made onemonth from today what is the value of the amount which will be in the account at the end ofthirty years? Rounded to 2 decimal places.3. What will be the present value, if $5,400 is discounted back 4 years at an interest rate of 3%compounded semi-annually?

We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

1. A security pays you an annual amount of $900 for 10 years. The seller of the security requires the first payment to be made today and the last payment to be made 9 years from today. Interest rate on this security is 5.75 percent per annum. Calculate the present value rounded to 2 decimal places.

1. A security pays you an annual amount of $900 for 10 years. The seller of the security requires the first payment to be made today and the last payment to be made 9 years from today. Interest rate on this security is 5.75 percent per annum. Calculate the present value rounded to 2 decimal places.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

See similar textbooks

Related questions

Q: Compute the present value of a perpetuity that pays $6,744 annually given a required rate of return…

A: Perpetuity is a financial term that refers to a stream of cash flows or a series of payments that…

Q: month. The certain annuity is 325038 PLN and nominal interest rate is 12%. Prepare the amortization…

A: Annuity Payment to be received at the beginning of each month Annuity amount 325038…

Q: You take out a 30-year mortgage, at a nominal annual rate of X%, with monthly compounding. Each…

A: Nominal Interest Rate: It represents the rate of interest that does not take into consideration the…

Q: An investor decides to purchase a five-year annuity with an annual nominal interest rate of 12%%…

A: Present Value: Given a certain rate of return, It is the current value of a future financial asset…

Q: Consider a five-year fixed - payment security that has a present value of $1,500. If the annual rate…

A: Present value of annuity payment = wherePresent value = $1500 (given)A = Periodic payment = payment…

Q: A simple "EE US Treasury Savings Bond" pays the holder $1000 in 30 years. Given that the applicable…

A: To calculate the bond cost we will use the below formula Bond cost today = FV/[1+(r/m)]n*m Where…

Q: Suppose an annuity at 5% compounded semi-annually will pay $5000 at the end of each 6-month period…

A: The annuity refers to the series of regular payments that last for a specific period of time. The…

Q: 2. An annuity pays 200 at the end of each month for 10 years. Using an annual effective interest…

A: Present value:The present value is a financial term that shows the current value of a future…

Q: If you want to be paid from a l13 year ordinary annuity with a guaranteed rate of 3.09% compounded…

A: The annuity refers to the series of payments or receipts that last over a specific period of time.…

Q: A security pays you an annual amount of $900 for 10 years. The seller of the security requires the…

A: Hey, since there are multiple questions posted, we will answer the first question. If you want any…

Q: You will receive a cash payment of $7072 in 7 years. If the relevant interest rate is 19.89%, how…

A: Time Value of Money states that a dollar earned today is more valuable than any time in the future,…

Q: A security pays you an annual amount of $900 for 10 years. the sellerof the security require the…

A: Annuity refers to series of equalized payments that are paid or received at start or ending of…

Q: You expect to receive the following: $1,691 at the end of each year for 12 years $16,002 $3,822…

A: The concept of the time value of money states that the current worth of money is more than its value…

Q: A security pays you an annual amount of $900 for 10 years. The seller of the security requires the…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Suppose you are going to receive $11,000 per year for 8 years. The appropriate interest rate is 11…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: You took out a $200,000 mortgage for 30 years. The contract rate is tied to the one-year U.S.…

A: Mortgage value: $200,000Number of years of mortgage: 30Fixed risk premium: 9%First year index rate:…

Q: A security pays $800 every 8 years forever. The appropriate discount rate is 2% (EAR). What is the…

A: The rate of return used for discounting future cash flows down to their current value is a discount…

Q: A 30 year mortgage for $100,000 has been issued. The interet rate is 10% and payments are made…

A: Mortgage Amount = $100,000 Interest rate = 10% Nominal interest rate = 12% Inflation rates are 0%,…

Q: A security pays you an annual amount of $900 for 10 years. The seller of the security requires the…

A: The present value calculation provides a facility to know the amount of future payments at present.…

Q: A security pays $55 in one year and $133.10 in three years. Present value of this security is $150.…

A: IRR can be calculated by following function in excel=IRR(values,[guess])Values = Cash flowsGuess =…

Q: suppose a 25- year mortgage of $400,000 at a fixed nominal interest rate of 3.5% per year,…

A: Data given: Mortgage = $ 400,000 N= 25 years Rate= 3.5% p.a. compounded annually

Question

100%

1. A security pays you an annual amount of $900 for 10 years. The seller of the security requires
the first payment to be made today and the last payment to be made 9 years from today.
Interest rate on this security is 5.75 percent per annum. Calculate the present value rounded to
2 decimal places.
2. An investment promises to pay into an account that pays you 6 percent annually, $150 per
month for the next twenty-two years. Suppose the first deposit into the account is made one
month from today what is the value of the amount which will be in the account at the end of
thirty years? Rounded to 2 decimal places.
3. What will be the present value, if $5,400 is discounted back 4 years at an interest rate of 3%
compounded semi-annually?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
1 a) A security pays you an annual amount of $900 for 10 years. The seller of the security requires the first payment to be made today and the last payment to be made 9 years from today.Interest rate on this security is 5.75 percent per annum. Calculate the present value rounded to2 decimal places. b) An investment promises to pay into an account that pays you 6 percent annually, $150 per month for the next twenty-two years. Suppose the first deposit into the account is made onemonth from today what is the value of the amount which will be in the account at the end of thirty years? Rounded to 2 decimal places
A security pays you an annual amount of $900 for 10 years. the sellerof the security require the first payment to be made today and the last payment to be made 9 years from today. Interest rate on this security is 5.75 percent perannum. Calculate the present value rounded to 2 decimaal places.
1 a. A security pays you an annual amount of $900 for 10 years. The seller of the security requiresthe first payment to be made today and the last payment to be made 9 years from today.Interest rate on this security is 5.75 percent per annum. Calculate the present value rounded to2 decimal places. b. You are buying your first car for $20,000 and are paying $2,000 as a down payment. Youhave negotiated a nominal interest rate of 12 percent and you plan to pay-off the carover five years. What is the monthly payments you must make on this loan?
Assume you have secured a loan of $10,000 from a bank which will be paid in one year. The fin bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the opening balance for the month of June? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices 6,002.10…
Assume you have secured a loan of $10,000 from a bank which will be paid in one year. The fin bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the closing balance for the month of November? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices a. $847.31…
Assume you have secured a loan of $10,000 from a bank which will be paid in one year. The fin bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the closing balance for the month of November? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices $847.31 $2,534.38 $5,045.10 No choice given $1,692.13
Assume you have secured a loan of $10,000 from a bank which will be paid in one year. The bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the interest rate to be paid for the month of October? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices a. 2.25…
Assume you have secured a loan of $10,000 from a bank which will be paid in one year. The bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the interest rate to be paid for the month of October? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid CHOICES: A.10.32B.…
What is the present value of a security that promises to pay you $5,000 in 20 years? Assume that you earn 7% compounded semi-annually if you were to invest in other securities of equal risk. A Mortgage company offers to lend you US$150,000; the loan calls for payments of $12,088 per year for 30 Years. What interest rate is the mortgage company charging you? Bank A offers to pay you a lump sum of $20,000 after 5 years if you deposit $9,500 with them today. Bank B, on the other hand, says that they will pay you a lump sum of $22,000 after 5 years if you deposit $10,700 with them today. Which offer should you accept, and why? Justincase Corporation has issued a bond that has a 10% coupon rate, payable semi-annually. The bonds mature in 7 years, have a face value of $1,000 and a yield to maturity of 12%. What is the price of the bond?
We assume that we have a secured a loan of $10,000 from a bank which will be paid in one year. The bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the interest rate to be paid for the month of October? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices…
Suppose you are given a choice of the following two securities: (a) an annuity that pays $10,000 at the end of each of the next six years; or (b) a perpetuity that pays $10,000 forever, but the first cash payment is 11 years from today. Which security do you choose if the annual interest rate is 5%? Does your answer change if the interest rate is 10%? Explain why or why not.