8)Justin is twenty years old and has saved 50,000. He can invest it in a real estate venture that will pay 15% annually for 10 years, and then in a mutual fund for an additional 10 years at a 9.75 annual return. He's hoping that in 20 years, when he is 40, he will have enough money to pay for his child's college education, estimated at about $75000 per year. WillI he have enough?
Q: nnual deposits of $3200 at the beginning of every six- month period into a fund earning 4.2% compoun...
A: Future value includes the deposits made and the interest accumulated over the period of time. That g...
Q: Franco is considering investing P200,000 in an investment that will have a maturity value of P1,000,...
A: Investment amount (P) = P 200000 Maturity value (F) = P 1000000 n = 10 years = 40 quarters Let r = Q...
Q: A BBB-rated corporate bond has a yield to maturity of 7.4%. A U.S. Treasury security has a yield to ...
A: Here,
Q: On June 1, 2019, YODA CORP. acquired a 5-year, 10%, P1,000,000 face value bonds at 92. The company p...
A: The amount of interest due on bonds or debentures is known as interest receivebles. The calculation ...
Q: 6. A sari-sari store vendor buys some goods from a dealer who asks P15,950 at the end of 180 days. T...
A: Hi! Thank you for the question, As per the Honor Code, we are allowed to answer one question in case...
Q: Red Company's book value per share is P25, the market to book value ratio is 1.5. If the earnings pe...
A: Answer - Step 1 - Calculation of Market Value of Shares - Market to book value ratio = Market Price ...
Q: A company has a P1,200 face value bond with 8 years until maturity. The bond possesses a characteris...
A: Approximate Yield to maturity is the rate of return of a bond with an assumption that the bond will ...
Q: For questions 8-10 assume that Rosa has a 10% chance of getting sick in the next year. If she gets s...
A: Risk premium is the premium that an individual gets due to taking risks. So, whatever a person saves...
Q: Evaluate Basel III and its implication on risk management of the financial institutions.
A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one...
Q: You are considering a 30-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid se...
A: Effective annual rate = 10.38% Effective semiannual rate = (1+Interest rate)^(6/12)-1 = 1.1038^.5-...
Q: Given: 20,000 shares cumulative preferred stock ($3.5 dividend per share): 40,000 shares common stoc...
A: Preferred stock is the component of share capital that essentially acts as a debt instrument and is ...
Q: A five year P1,000 par value bond pays a 5% annual coupon. Given a YTM of 7%, what is the price of t...
A: The present discounted value of a bond's future cash flow is generally known as the bond price. The ...
Q: Some in the academic world contend that corporate risk management is a zero-sum game. Discuss.
A: Corporate risk management refers to all of a company's efforts to minimise financial losses. Risk ma...
Q: Fifteen years ago your grandfather purchased for you a 25-year $1,000 bond with a coupon rate of 12 ...
A: Bond valuation is a strategy for assessing a bond's conceptual fair value. Bond valuation entails de...
Q: Company A and B both expected rates of return of 18%. Company A has a Standard Deviation of 45% and ...
A: Expected returns of both A and B = 18% Company A standard deviation = 45% Company B standard deviati...
Q: Consider the two risky investments below: Scenario Asset 1 Asset 2 Probability Returns 0.1 Probabili...
A: Part 2 of the questio is : What is the difference between systematic and non-systematic risk. There...
Q: Bobby has heard the importance of saving early for retirement. He wants to retire in 35 years. But h...
A: Here, Monthly Savings (PMT) is $600 Time to Retire is 35 years Time to Start saving is after 20 year...
Q: The analyst estimates that after three years the National Inc’s free cash flow will grow at a consta...
A: The value of company can be calculated as per the free cash flow valuation model
Q: weighted average cost of capital
A: WACC stands for Weighted Average cost of capital refers to the cost of capital of the company which ...
Q: Franco plans to invest P1,500 in a mutual fund. If he earns 12% interest compounded monthly, to what...
A: Future value of annuity is referred as the value of group, which used to recur the payment in the fu...
Q: If today 1 US Dollar can buy 3 Korean Won and 1 Korean Won can buy equals 2 Philippine Peso, what is...
A: Cross exchange rate is used when there is no direct quotation available between two currencies. Thus...
Q: Capitial Investment hired a new analyst Jack Lee to evaluate a portfolio consisting of two stocks, M...
A: Given: Expected rate Standard deviation Meta Platforms 15% 25% Walmart 10% 20% Risk free ...
Q: ABC Corp issued a bond with a maturity of 12 years. It has a 9 percent annual coupon, a yield to mat...
A: Face value (FV) = P1000 Coupon rate = 9% Yield to maturity (r) = 8% Years to maturity (n) = 12 Years...
Q: On January 1, 200A, ABC Company sells to XYZ, a used transportation equipment, which was acquired at...
A: Notes receivables are the promissory notes which works as a legal document for repaying the money bo...
Q: PI of a project tha
A: PI (Profitability Index) is defined as one of the techniques of capital budgeting. This technique sh...
Q: Company A is a motion picture production company. At the end of its most recent financial year, the ...
A: Here, Book value of Debt = $500,000,000 (Including interest for 8 years) Pre-cost of debt = 8% Lever...
Q: National Co. forecasts that its earnings per share will be P4.00 this year. The company has 500,000...
A: The capital structure of company consists of debt and equity. Dividend are paid out of net income an...
Q: 12. Tony's Towing borrows $17,250, at 7.5% interest, for 320 days. If the bank uses the exact intere...
A: Solution:- When an amount is borrowed from bank, bank charges interest on it. In exact interest meth...
Q: 15. Compute the principal (in $) for the loan. Use ordinary interest when time is stated in days. P...
A: The principal amount can be calculated with the help of simple interest function
Q: Let's suppose you (USA dealer) imported a product from German on Dec 1, 2018 at € 300, payable in 60...
A: Exchange rate (ER) is a value at which payment is made in foreign currency to buy the goods. Exchang...
Q: sume tilat gets sick, her medical bills will amount to $3600. She has a wealth of $10,000. Suppose s...
A: In economics, utility generally refers to the pleasure or satisfaction that consumers get from using...
Q: o. is considering a 5-year, P6,000,000 bank loan to finance service equipment. The loan has an inte...
A: Loans are paid by equal annual payments that carry the interest and payment for the principal amount...
Q: Nominal interest rates are the rates stated or quoted in the terms or contract of a particular secur...
A: Real interest rate is the rate that shows the actual cost of borrowing to the borrower by removing t...
Q: Alexa Co. is the value of its equity given the following information: Government risk-free rates tod...
A: Here, Government risk-free rate = 4.5% Dividends of next year = Php10.00 Growth rate = 20% per year ...
Q: Assume that ASX 300 Index represents the risky portfolio. Calculate the annual return for the period...
A: Annual return is a return percentage of profit or loss occurring in one year of holding period to th...
Q: Consider the accompanying cash flow diagram (please click the link below), which represents three di...
A: The value of current payment or upcoming flow of payments at any future date when flow of payment te...
Q: Today, $1 = 1.82 Euro and $1 = 130 Korean Won. In the 90-day forward market, $1 = 1.84 Euro and $1 =...
A: Acorxding to interest rate parity theory, the currency of a country which has higher interest rate w...
Q: Assume that a bond will make payments every six months as shown on the following timeline (using six...
A: We are provided with a bond here that makes semi-annual payments. Semi-annual payments means twice e...
Q: Red Company is coming up with an investment that pays 8% interest compounded semiannually. What is t...
A: Effective Annual rate refers to the rate earned on savings account where compounding is done over a ...
Q: You are an investor who is interested in purchasing AC shares which is currently trading at a price ...
A: Intrinsic value of shares means actual value of shares that is being held by the company or the fair...
Q: A manager buys three shares of stock today, and then sells one of those shares each year for the nex...
A: Let R1, R2 and R3 be the returns for year 1, 2 and 3
Q: Picollo had after tax earnings of P5,000,000 in 2014. The company needs P5,000,000 for new investmen...
A: According to residual dividend policy, dividend is paid when amount left after set aside the amount ...
Q: Use the Excel "PV" function to find the present value of a 10% annual coupon bond with a $1,000 face...
A: Bond Bonds have an annual coupon rate attached to themselves, which the bondholder receives each yea...
Q: 17. Compute the rate (in %) for the loan. Round answers to the nearest tenth of a percent; use ordin...
A: Principal = $54000 Interest rate = r Period = 60 days Interest = $864
Q: Why dividen yield ratio increase while dividend payout ratio decrease? please explain in terms of in...
A: Dividend Yield ratio: It is the ratio will be used to calculate the ratio of dividen...
Q: new project paying yment renuu payments of 250,000$ starting from the end of 1st year. On the beginn...
A: The term "annuity" refers to an insurance contract created and distributed by financial organisation...
Q: 12. Which of the following statements are limitations of ratio analysis? (1) Ratio analysis may res...
A: Answer:- B (1), (2), and (4) An explanation of this Answer is The information on the i...
Q: A 12-year bond has a 9 percent annual coupon, a yield to maturity of 8 percent, and a face value of...
A: The bond price is calculated as sum of present value of cash flows
Q: Sammie Jo wants to begin saving for her retirement in 35 years. She researched and found an annuity ...
A: The future value is equal to the sum of the future cash flows multiplied by the future value factor ...
Q: thomas is planing to withdraw $6000 from savings account at the end of each quarter for five years. ...
A: Interest rate Is 5.38% Compounded Semi annually Amount of Witdrawal is $6,000 Time period of with wi...
Finance
Step by step
Solved in 2 steps
- 8) Justin is twenty years old and has saved 50,000. He can invest it in a real estate venture that will pay 15% annually for 10 years, and then in a mutual fund for an additional 10 years at a 9.75 annual return. He's hoping that in 20 years, when he is 40, he will have enough money to pay for his child's college education, estimated at about $75000 per year. Will he have enough?Ronald has an investment opportunity that promises to pay him $55,000 in three years. He could earn a 6% annual return investing his money elsewhere. What is the most he would be willing to invest today in this opportunity?Colin thinks he can reasonably expect to buy a house in five years. He would like to have accumulated a $15,000 down payment (or a 20% down payment) on a $75,000 home. If Colin thinks he can earn 4% per year on his investments, how much must he invest annually (rounded to the nearest whole dollar) to reach his goal?
- Ronald has an investment opportunity that promises to pay him $55,000 in three years. He could earn a 6% annual retum investing his money elsewhere. What is the most he would be willing to invest today in this opportunity?You would like your child who was bom today to be a millionaire eventually. To that end, you deposit $9,000 in an investment account that earns an average annual rate of return of 10.5%. The money in the account will be distributed to your son whenever the total reaches $1,000,000. How old will your son be when he gets the money (rounded to the nearest year)? O 47 years O 48 years O 46 years O 49 years.6) Your daughter is born today, and you want her to be a millionaire by the time she is 35 years old. You open an investment account that promises to pay 16% per year. How much money must you deposit each year, starting on her 1st birthday and ending on her 35th birthday, so your daughter will have $1,000,000 by her 35th birthday? N Year I/Y Cash flow 7) The present value of the following cash flow stream is $8,500 discounted at 10 percent annually. What is the value of the missing cash flow? 1,000 PV 1 ? PMT 2 2,000 FV 3 4,000 4
- John has an investment opportunity that promises to pay him $16,000 in four years. He could earn a 6% annual return investing his money elsewhere.Suppose the opportunity requires John to invest $13,200 today. What is the interest rate John would earn on this investment?Ronald has an investment opportunity that promises to pay him S55,000 in three years. He could arn a 6% annual return investing his money elsewhere. What is the most he would be willing to invest today in this opportunity?Ian would like to save $1,500,000 by the time he retires in 40 years. If he believes that he can achieve a 7% rate of return, how much does he need to deposit each year to archieve his goal?
- Paolo is considering purchasing a Sunlife Capital investment. Paolo will receive P1,000 every three months for the next two years if he purchases the investment. He would make the first P1,000 payment as soon as he purchases the investment. How much should Paolo be willing to pay for this investment if his required rate of return is 16%? * P1,345.60 P10,764.80 P7,002.05 P1,368.57Your older brother turned 35 today, and he is planning to save $7,000 per year for retirement, with the first deposit to be made one year from today. He will invest in a mutual fund that's expected to provide a return of 7.5% per year. He plans to retire 30 years from today, when he turns 65, and he expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can he spend each year after he retires? His first withdrawal will be made at the end of his first retirement year.Mr. Wise is creating a college investment fund for his daughter. He will put in P850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college? * P12,750 P23,079 P11,250 P24,003 P12,263