6. Calculating Annuity Values. Your company will generate $50,000 in cash flow each year for the next nine years from a new information database. The computer system needed to set up the database costs $300,000. If you can borrow the money to buy the computer system at 8.25 percent annual interest, can you afford the new system?

6. Calculating Annuity Values. Your company will generate $50,000 in cash flow each year for the next nine years from a new information database. The computer system needed to set up the database costs $300,000. If you can borrow the money to buy the computer system at 8.25 percent annual interest, can you afford the new system?

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

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Similar questions

Say that you want to establish a scholarship fund that will make fixed payments forever. To fund the scholarship, you plan to make 12 annual contributions of $9.9k to an investment account with an expected return of 6.0% interest annually. Your first contribution occurs today. If the scholarship fund makes its first payment two years following the last contribution, then what is the fixed annual payment that the scholarship fund will award? (Round to the nearest dollar)
Suppose you save $500 per year at the end of each year for 15 years and earn 8.25% interest per year. What is the present value of this annuity? Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 8%. What is the value of this perpetuity?
You have just won a lottery that promises an annual payment of $120000 beginning immediately. You will receive a total of 15 payments. If you can invest the cash flow in an investment that is paying 8% annually, what is the present value of this annuity?
(Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated $19,000 at the end of 11 years. To do this you plan on depositing an ←equal amount into the bank at the end of each year. If the bank is willing to pay 15 percent compounded annually, how much must you deposit each year to reach your goal? To reach your goal, your annual deposit must be $ (Round to the nearest cent.)
Assume you won the state lottery and you are entitled to $5,000,000. If you choose not to take the money right away but wish to be paid weekly, you estimate that you will want to receive this cash flow over the next 10 years. How much will your weekly payment be at an interest rate of 5% ?
Draw the cash flow diagram for each problem and use interest rate with five decimal places. A person needs $20,000 immediately as a down payment on a new home. Suppose that she can borrow this money from her company credit union. She will be required to repay the loan in equal payments made every six months over the next 10 years. The annual interest rate being charged is 10% compounded bimonthly. What is the amount of each payment?
3) You have a financial goal of putting a $10,0000 down payment on a home in 5 years. How much would you need to save each year if you could earn 8% annually? A) $1,423.44 B) $1,704.56 C) $1,990.50 D) $2,200.23
2 ENGINEERING ECONOMICS: ANNUITY. Show complete solution and INCLUDE CASH FLOW DIAGRAM. Write legibly
(Annuity number of periods) You've just bought a new flat-screen TV for $3,000 and the store you bought it from offers to let you finance the entire purchase at an annual rate of 16 percent compounded monthly. If you take the financing and make monthly payments of $130, how long will it take to pay off the loan? How much will you pay in interest over the life of the loan? a. The number of years it will take to pay off the loan is years. (Round to one decimal place.) b. The amount you will pay in interest over the life of the loan is $. (Round to the nearest cent.)
You plan to buy an apartment for $300,000, but you have only $8,000 in cash. The bank will loan you the rest at the annual interest rate of 12%, with the payments spread over 30 years. Find your yearly payments.
1. Calculate the present value of each cashflow using a discount rate of 7%. Which do you prefer most? Show and explain all supporting calculations. a. Cashflow A: receive Php60 today and then receive Php60 in four years. b. Cashflow B: receive Php12 every year, forever, starting today. Cashflow C: pay Php50 every year for five years, with the first payment being next year, and then subsequently receive Php30 every year for 20 years. d. Cashflow D: receive Php9 every other year, forever, with the first payment being next C. year.

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