19. A business worth $180,000 is expected to grow at 12% per year compounded annually for the next 4 years. (a) Find the expected future value. (b) If funds from the sale of the busi- ness today would be placed in an account yielding 8% compounded semiannually, what would be the minimum acceptable price for the business at this time? [10.3]

19. A business worth $180,000 is expected to grow at 12% per year compounded annually for the next 4 years. (a) Find the expected future value. (b) If funds from the sale of the busi- ness today would be placed in an account yielding 8% compounded semiannually, what would be the minimum acceptable price for the business at this time? [10.3]

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

The value of business, currently priced at 100000 Ria. is expected to increase by 20% a year. After how many years will it be worth 1 million Rial Find the value in 10 years time Please answer all parts of the question.
Suppose that the forward rate today for the period between 1 year and 2 years in the future is 7% (with annual compounding) and that sometime ago a company entered into an FRA where it will receive 5% (with annual compounding) and pay SOFR (market rate) on a principal of $100 million for the period. Today the 2-year zero rate rate is 6.5%. What is the value of the FRA this company has entered into to get paid 5%, now that the forward rates have gone from 5% to now being 7%?
which investment is preferable?
A business worth $180,000 is expected to grow at 12% per year compounded annually for the next 4 years. (a) Find the expected future value. (b) If funds from the sale of the business today would be placed in an account yielding 8% compounded semiannually, what would be the minimum acceptable price for the business at this time?
Mike Derr Company expects to earn 8% per year on an investment that will pay $616,000 seven years from now. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Compute the present value of this investment. Future Value Table Factor Present Value
klp.1
7
2. Effective Annual Yield (EAY) and Effective Annual Rate (EAR) A. You plan to invest $10,000 for one year and you have the opportunity to invest it at a 12 percent APR, compounded monthly. Alternatively, you could invest the funds at an annual rate of 12.25 percent compounded semiannually. What is the EAY of each alternative? Which investment should be chosen? B. A car loan offered by Bank One requires quarterly payments and has an APR of 5.8 percent, whereas the same loan amount may be obtained from Bank Two at an APR of 6 percent with monthly payments. Which loan would you ch0oose and why?
How much would a company have to invest now in order to sufficiently provide for annual payments of $313,000 over a 8-year period? Assume the interest rate is 12% per year.
26. We plan to have $1,500,000 in 35 years. We will make quarterly deposits of $1,000 at the end of every 3 months for 25 years and then allow the money to accumulate, without more deposits, at 8% compounded annually for the last 10 years. What monthly compounded nominal rate of return will we have to earn over the 25 years that we will be making the quarterly deposits? O A. 13.482% O B. 12.774% O C. 12.641% O D. 11.722%
How long would you have to invest $8900 for it to grow to $13,450, assuming an APR (annual percent rate) of 6.2% and assuming quarterly compounding? on excel
ali business with 780000 is expected to grow at 10% per year compounded annually for the next 4 years. Find (a) the expected future value (b) if funds from sale of the business today would be placed in an account yielding 6% compounded semi annually, what would be the minimum acceptable price for the business at this time

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS