Suppose $100 is invested at the end of each year for the next 5 years into an account paying an interest rate r% p.a. How much can be drawn at the end of the 5 years
Q: Given the following information of the mortgage pool that backs a MPT, what is the regular scheduled…
A: The pool of mortgages that make up mortgage-backed security (MBS) when the securities were issued,…
Q: f. What is cash provided by operations during 2016? (Do not round intermediate calculations. Enter…
A: Cash flows from operating activities is one of the important section of cash flows statement. It…
Q: You have been given the following return information for a mutual fund, the market index, and the…
A: Jensen’s alpha-It is used to calculate the return on a porfolio in excess of its theoretical…
Q: What long will it take a $100 investment to double to $200 if the interest rate is 6%?
A: As per the concept of time value of money the worth of money changes with passage of time as money…
Q: Paige invested the profit of her business in an investment fund that was earning 3.75% compounded…
A: Present value is an estimate of the present value of future cash values that may be received at a…
Q: g to Khazanah Nasional, if the POS Malaysia Service does not change its business model, it will…
A: Present value is the equivalent value based on the time and interest rate of the money that would…
Q: You are buying a house and will borrow $245,000 on a 25-year fixed rate mortgage with monthly…
A: Mortgage loans are paid by monthly payments and these monthly payment carry the payment for interest…
Q: You are planning to save to purchase a car in 23 years for $28,000. You have opened a bank account…
A: Annuity is a series of equal payments made for some particular period of time . When payment is made…
Q: y required for a three year project costs $20,000, belongs in a 15% CCA class, and will require a…
A: NPV is a very important capital budgeting method based on the time value of money and can be found…
Q: went from $0.00887619 to $0.00906626. • By how much did the yen appreciate against the dollar? • By…
A: In the market the exchange rate of one currency with the other keeps changing that depending on the…
Q: You are told that the nominal rate of interest is 3.7% per 4 months payable monthly. Calculate the…
A: The Effective Annual Rate (EAR), also called the Annual Equivalent Rate (AER) or maybe the…
Q: Question 2 Consider an investment portfolio consisting of stocks as well as options on stocks. You…
A: The Variance-Covariance (or model-building) approach is a commonly used method to determine the…
Q: Below is a list of prices for $1,000-par zero-coupon Treasury securities of various maturities. An…
A: Maturity (Periods) = 3 The price of the coupon bond is
Q: Suppose the return of asset A to D, is given as follows: Asset 2018 2019 2020 2021 A 9% 10% -2 % 15%…
A: In the given case, we have provided the return of asset A to D and the number of years. The expected…
Q: Watson Oil recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than…
A: Given data;sales= $ 8250operating cost = $ 5750Depreciation = $ 1500Value of bond = $3200interest…
Q: You are considering buying a new house, and have found that a $250,000, 30-year fixed-rate mortgage…
A: Mortgage amount = $250,000Period = 30 yearsInterest rate = 8%New rate = 9%
Q: A 6.68% coupon bond matures in 5 years. Its value at maturity is $1,000. What is the bond's modified…
A: Coupon rate = 6.68%Maturity = 5 yearsPar value = $1000Yield to maturity = 7.68%
Q: NTERNATIONAL FINANCE Today you learned about following exchange rate quotes: (a) 1 KWD (Kuwaiti…
A: In the international business, there is a need for some other currencies but they can not be bought…
Q: Bond P is a premium bond with a coupon rate of 9.2 percent. Bond D is a discount bond with a coupon…
A: The yearly income a bond generates as a proportion of its current market price is expressed as the…
Q: You buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD strike price of 0…
A: Call option gives the opportunity to buy the currency on the expiration but there is no obligation…
Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…
A: Value of a company can be found as the present value of the free cash flow from the project and…
Q: ou find the following Treasury bond quotes. To calculate the number of years until maturity, assume…
A: A bond indicates a debt instrument that allows the issuer to raise funds and also obligates him to…
Q: If Kevin changes the dividend policy from a low-dividend-payout policy to a high-dividend-payout…
A: Return can be generated to a shareholder through dividends and capital gain.
Q: Which of the following statements accurately describes the ex-dividend date? O It is the date when…
A: Dividend is the part or share of profits that is being distributed to shareholders. It can be cash…
Q: You expect to inherit 75,000 dollars 8 years from now. If r = 2 percent, find the PV. Group of…
A: Hi studentSince there are multiple questions, we will answer only first question.Time value of money…
Q: Consider a $5,000,000, 8.5%, 30-year mortgage with monthly payments, and expected realistic…
A: This means that there are no upfront fees or penalties associated with the loan. The contractual…
Q: Years 2 Assume Carlton enters into a three-year fixed-for-fixed swap agreement to receive Swiss…
A: Net present value is the difference between the inflow and outflow of an investment taking into…
Q: Jon establishes a long position of one T-bond future today for a settlement price of 101'02. The…
A: T-bond are government bonds issued by federal banks and T bond futures are traded on the CME stock…
Q: ohn is 29 years old (just had his 29th birthday party) and is thinking about getting an MBA degree.…
A: Present value is equivalent today of the future cash flows that are going to be received based on…
Q: McCue Inc.'s bonds currently sell for $1,200. They pay a $90 annual coupon, have a 25-year maturity,…
A: Yield to maturity is rate realized on bond when held till maturity of bond and all cash flow…
Q: You are the Director of Finance at BlueKay Enterprises. You barely had enough time to eat your…
A: Summary of the question:BlueKay Enterprises, an American company based out of Massachusetts, has…
Q: onsulting company Clark Robinson and Morton CRM is in that never ending budgeting phase of the year.…
A: IRR is an internal rate of return and is the financial break even point where the present value of…
Q: A portfolio has a total return of 4.5%, a standard deviation of 40%, and a beta of 0.5. The market…
A: Market return, Rm = 12%Standard deviation of market return = 20% Market's treynor measure = 0.10 We…
Q: The spot rate is $0.51/CAD1. Platinum Bank undertakes arbitrage transactions in CAD using a sum of…
A: Exchange Rates: The spot exchange rate is the current rate at which one currency can be exchanged…
Q: Express this quotation in an indirect form where the dealer is presenting prices to buy and sell the…
A: In foreign exchange market , indirect quote indicates amount of foreign currency required to buy or…
Q: A firm is considering purchasing a machine that costs $56000. It will be used for six years, and…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: % compounded monthly is to be repaid by equal monthly payments of $400 per month. (a) How much…
A: Loans are paid by monthly payments and these payments carry the payment for interest and payment for…
Q: If A = 1,200,000 pesos and j = 15% interest rate compounded quarterly and t = 10 years, then solve…
A: Present Value (A)= 1,200,000 pesosInterest rate (j)= 15% (compounded quarterly)time (in years)=…
Q: Assume the Black-Scholes market model dSt=oSt dBt. So > 0, Dt = e-rt. Let Ot be a derivative with…
A: The Black-Scholes model is a widely used mathematical formula in finance for valuing European-style…
Q: 3.67 Determine the interest rate (i) that makes the pairs of cash flows shown economically…
A: Variable in the question: YearCash Flow 1 ($)Cash Flow 2…
Q: Identifying and Analyzing Financial Statement Effects of Dividends The stockholders' equity of…
A: The distribution of a company's earnings to its shareholders is called dividends. When a dividend is…
Q: ind the future value of an annuity due with an annual payment of $13,000 for three years at 4%…
A: Annuity means periodic payments and when periodic payments are at beginning of the period, the…
Q: Chris purchases $3,000 worth of stock that costs $30 per share and borrows money so his debt to…
A: Given: Equity to debt ratio = 20%. This means for every $1 of equity, there's $0.20 of…
Q: Which of the following statements regarding bonds is most accurate? A. Eurobonds are international…
A: One way to classify bonds is based on where and how they are issued and traded. This leads us to…
Q: The Johnny Pickles Brewing Company has been successful as a small craft microbrewery with a focus on…
A: NPV is also known as Net Present Value. It is a capital budgeting tehcniques which help in decision…
Q: A firm's current capacity utilization is 80%. The firm's current net property, plant and equipment…
A: A firm working on full capitcity of its current sales has the same growth in net property, plant and…
Q: Consider the following portfolio. You write a put option with exercise price $90 and buy a put with…
A: Call options are the financial derivatives that provide the option holder a right to buy some…
Q: Five years ago, your firm issued $1,000 par, 25-year bonds, with a 10% coupon rate and a 11% call…
A: Variables in the question:PV=$1000Coupon rate=10%N=25 yearsCall premium=11%
Q: You are the CFO for Play Now sports and you have 2 different machines to consider for purchase. The…
A: YearsMachine IstMachine 2ndInitial…
Q: of $0.8100/NZS traded at a premium of $0.0192 per NZS and with an expira date three months from now.…
A: Consider an America Call Option on New Zealands Dollars ( NZ$) with strike price of $0.8100/ NZ$…
Suppose $100 is invested at the end of each year for the next 5 years into an account paying an interest rate r% p.a. How much can be drawn at the end of the 5 years?
Approach
(i) The first $100 is contributed in one year’s time and has to wait 4 years to “mature”. Write an equation describing this.
(ii) The second $100 is contributed in two year’s time and has to wait 3 years to “mature”. Write an equation describing this.
Step by step
Solved in 3 steps with 5 images
- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
- Suppose $100 is invested at the end of each year for the next 5 years into an account paying an interest rate r% p.a. How much can be drawn at the end of the 5 years? Approach (i) The first $100 is contributed in one year's time and has to wait 4 years to "mature". Write an equation describing this. (ii) The second $100 is contributed in two year's time and has to wait 3 years to "mature". Write an equation describing this. (iii) The third $100 is contributed in three year's time and has to wait 2 years to "mature". Write an equation describing this. (iv) Continue with this logic and sum all the matured values expressedset up an equation and solve each problem. Suppose that $500 is invested at a certain rate of interest compounded annually for 2 years. If the accumulated value at the end of 2 years is $594.05, find the rate of interest.You make an investment into a money market account at time T=0. In year T=5, the value of the money market account will be $5,000. The money market account pays an annual interest of R=6%, and interest is compounded on a quarterly basis. What is the present value of this account?
- When an initial amount of P dollars is invested at r% annual interest compounded n times per year, the value of the account (4) after years is given by the equation nt A=P(1 + =)** n Write an equation that represents the value in an account that starts out with an initial investment of $5000 and pays 10% interest compound monthly. Then use that equation to fill the table and use the table to graph the equation. Years (1) Value (4) 0 5 10 15 20 oo → KIThe current amount A of a principal P invested in a savings account paying an annual interest rate r is given by A = P(1+r/n)^(rt) where n is the number of times per year the interest is compounded. For continuous compounding, A = Pe^(rt). Suppose $10,000 is initially invested at 2.5 percent (r = 0.025). a. Plot A versus t for 0 ≤ t ≤ 20 years for four cases: continuous compounding, annual compounding (n = 1), quarterly compounding (n = 4), and monthly compounding (n = 12). Show all four cases on the same subplot and label each curve. On a second subplot, plot the difference between the amount obtained from continuous compounding and the other three cases. b. Redo part a, but plot A versus t on log-log and semilog plots. Which plot gives a straight line?Suppose a deposit of R dollars is made at the end of each year, and assume an APR of r% compounding continuously. (a) If we invest like this for 3 years, what is the value of the account after the third year? (b) If we are making these payments for 3 years, how much money must we invest today to cover the payments? (c) If we make these payments in perpetuity, find a formula which describes the amount of principal we must invest today to cover all future payments. (d) If we invest like this for three years, but instead use an account with an APR s% compounded weekly, determine s so that this second account has the same value as your answer in part (a) after three years.
- Suppose that an amount in Kina, is invested in a private financial institution, with interest compounded continuously at 8% per year. a). Write the equation in terms of P0 and 0.08 where P0 is the starting amount invested. And the final balance in the account is denoted with variable P b). Suppose that K2000 is invested. What is the total amount in the account after 3years? c). How many years will it take to have more then the invested amount*Using Matlab* The current amount A of a principal P invested in a savings account paying an annual interest rate r is given by A = P(1+r/n)^(nt) where n is the number of times per year the interest is compounded. For continuous compounding, A = Pe^(rt). Suppose $10,000 is initially invested at 2.5 percent (r = 0.025). a. Plot A versus t for 0 ≤ t ≤ 20 years for four cases: continuous compounding, annual compounding (n = 1), quarterly compounding (n = 4), and monthly compounding (n = 12). Show all four cases on the same subplot and label each curve. On a second subplot, plot the difference between the amount obtained from continuous compounding and the other three cases. b. Redo part a, but plot A versus t on log-log and semilog plots. Which plot gives a straight line?1. If you receive $176 each month for 12 months and the discount rate is 0.04, what is the future value? (show the process and can use financial calculator)