As a result of a slowdown in operations, Tradewind Stores is offering employees who have been terminated a severance package off $100,000 cash paid today, $100,000 to be paid in one year, and an annuity of $29,000 to be paid each year for 5 years Required: What is the present value of the package assuming an interest rate of 12 percent? (Future Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1) Note: Use appropriate factor(s) from the tables provided. Round the final answer to nearest whole dollar

As a result of a slowdown in operations, Tradewind Stores is offering employees who have been terminated a severance package off $100,000 cash paid today, $100,000 to be paid in one year, and an annuity of $29,000 to be paid each year for 5 years Required: What is the present value of the package assuming an interest rate of 12 percent? (Future Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1) Note: Use appropriate factor(s) from the tables provided. Round the final answer to nearest whole dollar

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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> An ordinary annuity that earns 7.3% compounded monthly has a current balance of $600,000. The owner of the account is about to retire and has to decide how much to withdraw from the account each month. Find the number of withdrawals under each of the following options. (A) $5000 monthly (B) $4000 monthly (C) $3000 monthly (A) Select the correct choice below, and, if necessary, fill in the answer box t OA. The total number of withdrawals of $5000 will be OB. The withdrawals of $5000 continue forever. Help me solve this View an example complete your choice. Get more help. Clear all Check answer rect: 0
A downtown bank promises its potential employees a $ 8000 sign-on bonus, an additional bonus of $ 12000 two years from now, an additional bonus of $ 19000 four years from now, and an additional bonus of $ 23000 six years from now. Lavanya was hired today but only intends to work for this bank for three years. What is the present value of this bonus payment structure to her? (Assume that money is worth 8% p.a. compounded quarterly)
A 25-year annuity was purchased with $225,000 that had accumulated in a RRSP. The annuity provides a semiannually compounded rate of return of 9.5% and makes equal month-end payments. What amount of principal will be included in Payment 206? What will be the interest portion of Payment 187? How much will the principal be reduced by Payments 50 to 100 inclusive? How much interest will be paid in the 14th year? What will be the amount of the final payment?
When your firm hires a new employee this year, it is obligated to contribute GBP £5,000 to a defined contribution plan for that employee, one year after the hire date. The contribution must be adjusted annually for inflation. Assume that inflation will be a constant 2.0% a year from this point forward. What is the pension cost to you of hiring a 30 year old who will be with the company for 32 years if the appropriate discount rate is 10%? Round your answer to the nearest pound.
A retired employee accumulated an amount of P1.5 M on his retirement account. Instead of taking as cash, it was invested in a portfolio earning 6% compounded quarterly. If he plans to get his first pension after 2 years, how much would he receive quarterly if he made an agreement that it would last for 10 years upon his first quarterly pension.
Please no excel. Thanks An 18-year loan of 21,000 may be repaid under the following two methods: amortization method with equal annual payments at an annual effective rate of 6.1% sinking fund method in which the lender receives an annual effective rate of 6.450% and the sinking fund earns an annual effective rate of j. Both methods require payment of X to be made at the end of each year for 18 years. Calculate j. Round your answer to one decimal place
Please help me
5. Determine the lump-sum amount needed to generate a retirement income of $30,000 per year for 20 years, assuming interest at 5% per year, compounded annually. 6. A furniture retailer offers a payment plan at 8.8% annual interest, compounded monthly. Customers can pay for a living room set by monthly payments of $288.15 for 2 years. a) Determine the total payments made by the customer to pay off the living room cot ))
A company will receive payments of $1,500 per year for the next four years under a subscription contract. The first payment will be made at the beginning of the contract. Assuming an annual interest rate of 3% is appropriate, the present value of an ordinary annuity is 3.71710 x $1,500 = $5,576, and the present value of an annuity due is 3.82861 x $1,500 = $5,743. Which amount must the company record for this sale in accordance with generally accepted accounting principles (GAAP) if collection is reasonably assured? $0 $5,576 $6,000 $5,743
Live Forever Life Insurancce Co. is selling a perpetuity contract that pays $1,400 monthly. The contract currently sells for $215,000. What is the monthly return on this investment vehicle? What is the APR? The effective annual return?
Annual contributions of $1,000 will be made to a TFSA for 25 years. The contributor expects investments within the plan to earn 7% compounded annually. What will the TFSA be worth after 25 years if the contributions are made: a. At the end of each year? (Round your answer to 2 decimal places.) TFSA's worth $ b. At the beginning of each year? (Round your answer to 2 decimal places.) TFSA's worth 69 c. By what percentage does the answer to Part (b) exceed the answer to Part (a)? (Do not round intermediate calculations and round your final percentage answer to 1 decimal place.) Percent difference %
A downtown bank promises its potential employees a $ 5000 sign-on bonus, an additional bonus of $11000 two years from now, an additional bonus of $ 17000 four years from now, and an additional bonus of $ 24000 six years from now. Lavanya was hired today but only intends to work for this bank for one year. What is the present value of this bonus payment structure to her? (Assume that money is worth 8% p.a. compounded quarterly) O a. $ 4439.85 O b. $ 4869.73 O c. $ 4619.23 O d. $ 4101.74 O e. $ 5000.00

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