Use the present value tables in Appendix A and Appendix B to compute the NPV of each of the following cash inflows: Required: a. $110,000 received at the end of six years. The discount rate is 6 percent. b. $4,800 received annually at the end of each of the next 15 years. The discount rate is 7 percent. c. A 10-year annuity of $7,000 per annum. The first $7,000 payment is due immediately. The discount rate is 6 percent. d. $38,750 received annually at the end of years 1 through 5 followed by $31,250 received annually at the end of years 6 through 10. The discount rate is 13 percent. Note: For all requirements, round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount. a. Net present value b. Net present value c. Net present value d. Net present value $ $ S S Amount 77,530 32,377 249,360 249,360

Use the present value tables in Appendix A and Appendix B to compute the NPV of each of the following cash inflows: Required: a. $110,000 received at the end of six years. The discount rate is 6 percent. b. $4,800 received annually at the end of each of the next 15 years. The discount rate is 7 percent. c. A 10-year annuity of $7,000 per annum. The first $7,000 payment is due immediately. The discount rate is 6 percent. d. $38,750 received annually at the end of years 1 through 5 followed by $31,250 received annually at the end of years 6 through 10. The discount rate is 13 percent. Note: For all requirements, round discount factor(s) to 3 decimal places, all other intermediate calculations and final answers to the nearest whole dollar amount. a. Net present value b. Net present value c. Net present value d. Net present value $ $ S S Amount 77,530 32,377 249,360 249,360

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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Present Value of an Annuity Determine the present value of $110,000 to be received at the end of each of four years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.
Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. $14,129 to be accumulated in 3 years; quarterly payments of $1075. The interest rate needed is approximately %. (Type an integer or decimal rounded to two decimal places as needed.)
Subject: accounting
blem #1: $10,000 is used to purchase an appropriate size annuity that has level annual payments for 18 years. The price of the annuity is based on an effective annual rate of 11.2%. As each payment is received, it is put into a fund that earns an effective annual rate of 7%. (a) Determine the accumulated value of the investment at the end of 18 years. (b) If the $10,000 were put into a fund that was to produce the same final value after 18 years, what annual effective rate would that fund have to offer?
Calculate the present value of the following future cash flows, rounding all calculations to the nearest dollar: 11. 12. 13. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) $5,000received in threeyears with interest of 10% $5,000received in each of the following threeyears with interest of 10% Payments of $2,000 $3,000 and $4,000received in years 12and 3respectively, with interest of 7% 11. Calculate the present value of $5,000 received in three years with interest of 10%. (Enter any factor amounts to three decimal places, X.XXX.) Future value 5000 × X Present value factor .751 = Present value = 3755 12. Calculate the present value of $5,000 received in each of the following three years with interest of 10%. (Enter any factor amounts to three decimal places, X.XXX.) Amount of each cash inflow X Annuity present value factor 5000 × 2.487 = Present value of an annuity 12435 13. Calculate the present value for…
A machine has the following cash flows for the last two years of service. The MARR is 10% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Calculate the EUAC of the machine if kept in service over the remaining two years O A. $49,600 O B. $24,929 O C. $37,500 O D. $27,500 O E. $22,100 (b) Calculate the marginal cost of the machine for year 2. OA. $37,500 O B. $22,100 OC. $24,929 O D. $27,500 O E. $49,600 Year 0 1 2 Market Value $45,000 31,000 24,000 (・・・ O&M Costs $9,000 12,000
Assume that you are looking at three perpetuities. Perpetuity 1 (P₁) has annual cash flows of $850 in Years 1 through infinity (1-x) and a present value at Year 0 of $10.119.047619. Perpetuity 2 (P₂) has annual cash flows of $620 in Years 11 through infinity (11 - oo) and the same effective rate as Perpetuity 1. Perpetuity 3 (P3) has annual cash flows of $780 in Years 25 though infinity (25 - 0) and the same effective rate as Perpetuities 1 and 2. Given this information, determine the value of all three perpetuities when evaluated at Year 35. $239.599.69 O $248,272.58 $245,381.62 O$242,490.65 O $254,054.51
Determine the monthly payment necessary to accumulate $30,000 in a fund paying 6% per year, compounded monthly, for 8 years. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round your answer to the nearest cent.
Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. $29,488 to be accumulated in 5 years; quarterly payments of $1275. %- The interest rate needed is approximately (Type an integer or decimal rounded to two decimal places as needed.)
.
Annuity A has 20 years annual payments as follows:- i) ii) iii) Annuity i) ii) iii) The first payment is 1000 made at the end of the first year. The subsequent payments increase by 3% from the previous years. The effective interest rate is 5% per annum. B has 20 years annual payments as follows:- The first payment is X made at the end of the first year. The subsequent payments increase by X from the previous years. The effective interest rate is 6% per annum. Annuity C is an annuity immediate of 20-year annual level payments with effective interest rate of 7% per annum. Evaluate, (a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. stelua. [3 marks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. 13 marks] Preval 13 marks

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