Maria Addai has been offered a future payment of $750 two years from now. If she can earn an annual rate of 6.5 percent, compounded daily, on her investment, what should she pay for this investment today?

Maria Addai has been offered a future payment of $750 two years from now. If she can earn an annual rate of 6.5 percent, compounded daily, on her investment, what should she pay for this investment today?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Nina buys a piece of lot for P30,000 down payment and 8 deferred semi-annual payments of P 5,000…

A: Annuity: A contract between you and another party known as an annuity obligates the borrower to pay…

Q: Suppose you want to provide for the college education of your son. He will begin college six years…

A: The objective of this question is to find out the present value of an annuity that will provide…

Q: Joe wants to have $50,000 ten years from now to use for a down payment on a house. How much should…

A: Given: Future value = $50,000 Interest rate = 4.5% Years =10

Q: obi owns a perpetuity that will pay $1,000 a year, starting one year from now. He offers to sell you…

A: Present value is an estimate of the present value of future cash values that may be received at a…

Q: Jordan's investment manager offers her an interest rate of 8.0% compounded monthly on her…

A: Earlier Interest rate is 8% Compounded monthly Interest rate changed to is 8% compounded annually…

Q: what should she pay for this investment today?

A: SOLUTION:- Future value = $990 (FV) number of years = 2 (n) interest rate = 8.10% (r) Today…

Q: how much will the three project payments be worth at the time of her retirement?

A: Introduction: The term future value of annuity can be defined as the value of payments at some…

Q: Adrian's investment manager offers her an interest rate of 7.0% compounded monthly on her…

A: Here,Interest Rate is 7%Required Accumulated Amount is $424,000Time Period is 25 years

Q: Marian Plunket owns her own business and is considering an investment. If she undertakes the…

A: Initial investment = $1,410Cash inflow = $5,640Additional investment = $7,050Interest rate =…

Q: A retiree wants to purchase an annuity that will provide her with end-of-year payments for the next…

A: Number of year end payment = 30 Years Rate of return = 5.5% First annual payment = $ 15,000 Annual…

Q: Susan Orman wants to pay $1500 semiannually to her granddaughter for 10 years for helping her around…

Q: Kristina is going to finance new office equipment at a 5% rate over a 1.5 year term. If she can…

A: Using excel PV function

Q: Anita is considering the purchase of a five year annuity of 10 semiannual payments of $6,000 made at…

A: Annuity refers to the fixed amount to be received by the insurer for the rest of the life against…

Q: Puan Elly is planning to retire in 20 years and she plans begin withdrawing RM 50,000 anuallannually…

A: We need to use present value of ordinary annuity formula to calculate value of your retirement…

Q: After retirement, you expect to live for 25 years. You would like to have a $95,000 income each…

A: Here,

Q: Susan plans to make an investment today which promises to return to her $3,000 each year for ten…

A: Using excel PV function

Q: Marian Plunket owns her own business and is considering an investment. If she undertakes the…

A: NPV refers to the net present value. It is an important capital budgeting tool.

Q: Jane has been offered a choice between a lump sum payment of $100,000 today or an annuity thatpays…

A: Present value of cash plays a very vital role to calculate any figure which are estimated for the…

Q: You estimate a college education will be $300,000 when your child enters college in 18 years. You…

A: The question is based on the calculation of required rate of return in future value of money…

Q: When Jasmine retires she has $950,000 in a retirement account that earns 6% annual interest,…

A: Using PMT function in excel

Q: Freya plans to invest $1,600 every six months for 25 years. How much will this investment be worth…

A: Given information: Investment every 6 months : $1,600 Time period : 25 years Rate of interest : 8.2%

Q: Blushing Rose invests $1,000 into her Roth IRA. She can increase thisinvestment annually by $1,000…

A: The computation is as follows:

Q: etna is offering customers who invest $10,000 with them today a payment of $1,500 every 1.5 years in…

A: Concept, first we will calculate the effective rate for the 1.5 year period which is nothing buy the…

Q: Beginning a year from now, Bernardo O’Reilly will receive $20,000 a year from his pension fund.…

A: Present value is the current worth of future payments from the specific investment.…

Q: Your friend Anne is planning to invest $700 each year for four years and will earn a rate of 6…

A: Given information, Annuity Amount = $700 Time Period = 4 years Interest rate per year = 6%

Q: Jenny Abel is investing $2,500 today and will do so at the beginning of each of the next four years…

A: The FV of the investment refers to the combined value of its cash flows at a particular future date…

Q: re in 20 years. She opens up a retirement account with an APR of 5.25% compounded monthly. She will…

A: There is need of proper planning for the retirement and if there is proper planning on time better…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $6,800 of…

A: Payment = p = $6800Time = t = 14 yearsInterest rate = r = 5.25%

Q: You wish to retire after 22 years; at which time you want to have accumulated enough money to…

Q: a. If his opportunity cost is 9% compounded annually, what value should he place on this…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Your friend Anne is planning to invest $500 each year for five years and will earn a rate of 5.5…

A: According to the time value of money, the money available in the present is worth more than the same…

Q: Your mother has an annuity that will give her monthly payments for 13 years. She tell you it is…

A: The present value of annuity due is calculated with the series of annuity payments which is…

Q: Marian Plunket owns her own business and is considering an investment. If she undertakes the…

A: Net present value refers to the method of capital budgeting used for estimating the viability of the…

Q: Tran Lee plans to set aside $1, 800 a year for the next six years, earning 4 percent. What would be…

A: An annuity refers to a series of cash flow that are usually fixed in nature and that occurs…

Q: The Wright family wants to save money to travel the world. They purchase an annuity with a yearly…

A: The annuity value at end of 14 years can be calculated as future value of annuity.

Q: our uncle is about to retire, and he wants to buy an annuity that will provide him with $7,000 of…

A: Income per Year is $7,000Time Period is 25 YearsInterest rate is 5.25%Annuity Type is Annuity dueTo…

Q: Jenny Lopez estimates that as a result of completing her master’s degree, she will earn an…

A: Future Value (FV) is a financial concept that represents the projected worth of an investment,…

Q: You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement.…

A: Given, The cashflows is $90,000 The rate of interest is 8%

Q: The Flemings will need $80,000 annually for 20 years during their retirement. How much will they…

A: The amount can be calculated using the Present value of Annuity.

Q: Marian Plunket owns her own business and is considering an investment. If she undertakes the…

A: NPV is the difference between present value of cash inflows and the present value of the cash…

Q: Susan Orman wants to pay $1470 semiannually to her granddaughter for 11 years for helping her around…

A: The computation of the present value as follows:

Question

Expert Solution

Formula

PV = FV / [(1+r)^n]

PV = Present value

FV = Future Value = $ 750

r= interest rate = 6.5%

n= no. of years

since, its compounded daily, r is substituted with r/365 & n with n*365

i.e, PV = FV / [(1+r/365)^(n*365)]

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Anna decides to save Php 2 750 at the end of every 6 months, which is the amount paid into her retirement plan by the company where she works. If she chooses an investment fund that guarantees 8% per year compounded semiannually, how much will she have in 10 years
A woman plans to make a total of eight equal deposits, with the first deposit one year from now and succeeding deposits at 2-year intervals, so that she will be able to withdraw $12500 per year for 10 years starting 22 years from now. How much must be the equal deposits if the interest rate is a nominal 12% per year compounded monthly?
Hansi is promised to receive $89 in 9 years. Hansi, being profligate, prefers to spend this promised amount of money today. What is the equivalent present value of the settlement if the interest rate is 6.00%?
Sardor has been offered an investment that will pay him $500 three years from today. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today?
Del Monty will receive the following payments at the end of the next three years: $20,000, $23,000, and $25,00O. Then from the end of the 4th year through the end of the 10th year, he will receive an annuity of $26,000 per year. At a discount rate of 10 percent, what is the present value of all three future benefits? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value of all future benefits
If you desire to have $15,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 2 percent. Use the appropriate factor(s) from the tables provided
Debra Moore needs $20,000 3 years from now. How much should she invest today in order to reach her goal if she can earn an annual rate of 6% compounded semiannually? Round answers to the nearest dollar.
Bridget Jones has a contract in which she will receive the following payments for the next five years: $3,000, $4,000, $5,000, $6,000, $7,000. She will then receive an annuity of $10,500 a year from the end of the sixth year through the end of the fifteenth year. The appropriate discount rate is 13 percent. a. What is the present value of all future payments? (Use Excel to arrive at the answer. Round the final answer to the nearest dollar amount.) Present value b. If she is offered a buyout of the contract for $32,000, should she do it? Yes No
If you desire to have $15,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 2 percent.
Sally enters into an investment that will guarantee her 5% year if she deposits $2045 each year for the next 10 years. She must make the first deposit one year from today. How much will she have when she makes her last payment 10 years from now? (Please use excel function = FV) to solve
Donna enters into an investment contract that will guarantee her 4% per year if she deposits $3,500 each year for the next 10 years. She must make the first deposit one year from today, the day she signs the agreement. How much will she have when she makes her last payment 10 years from now?
Benjiena would like to purchase a house and lot amounting to P10,000,000 in the span of five years. She wants to invest regularly at the beginning of the year at a rate of 10% compounded annually. How much should she invest regularly to obtain that amount in five years?