Answered: What is the current value of a security…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are considering investing in a security that will pay you RM1,000 in 'n' years. Required: How long do you have to invest if you start the investment of RM250 today with the appropriate discount rate of 10 percent quarterly? i. ii. Assume these securities sell for RM365, in return for which you receive RM1,000 in 30 years. What is the rate of return investors earn on this security if they buy it for RM365?
An investment opportunity promises to pay $5,500.00 per year forever starting ten years from today. Assuming the interest rate of 7%, what should I pay today for this investment? $47,737.65 $58,194.98 $42,956.71 $30,111.39
An investment offers $966 per year for 11 years, with the first payment occurring Zyears from now. If the required return is 9 percent, what is the value of the investment? (HINT: Remember that when you calculate the PV of the annuity, the claculator gives you the present value of the annuity 1 period before the annuity starts. So if the annuity starts in year 7, that calculator will to give you the persent value of annuity in year 6. Now you have to bring this number to period O by inputting: N=6 (1 period before the annuity starts, in your case it would be a different number depending when your annuity starts) R=9 FV=Present value of annuity you found in step 1. And you solve for PV)
Valuing Delayed Annuities Suppose that you will receive annual payments of $18,650 for a period of 26 years. The first payment will be made 7 years from now. If the interest rate is 10.50%, what is the value of the annuity in year 6, what is the current value of this stream of cash flows? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of the Security in Year 6 Value of the Security today LA LA
10. Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security of $4,000 will be worth $5,324.00 three years in the future, assuming that no additional deposits or withdrawals are made, what is the implied interest rate the investor will earn on the security? ○ 6.00% ○ 7.50% ○ 10.00% ○ 12.00% If an investment of $35,000 is earning an interest rate of 11.00% compounded annually, it will take value of $58,977.04-assuming that no additional deposits or withdrawals are made during this time. for this investment to grow to a Which of the following statements is true, assuming that no additional deposits or withdrawals are made? If you invest $1 today at 15% annual compound interest for 82.3753 years, you'll end up with approximately $100,000. ○ If you invest $5 today at 15% annual compound interest for 82.3753 years,…
4. Find the future worth in year 10 of an investment that starts at P8000 in year 1. The interest rate is 10% per year.
8. A particular investment promises to make year-end annual payments in perpetuity. The first four annual payments will be $5. After that, future annual payments will grow at 5% per year forever. What is the present value of this investment if the discount rate is 10%? a. $98.68 b. $87.57 c. $76.46 d. $65.35 e. $54.24
Interest rate with annuity. What are you getting in terms of interest rate if you are willing to pay $10,000 today for an annual stream of payments of $2,300 for the next 10 years? The next 20 years? The next 50 years? Forever? What are you getting in terms of interest rate if you are willing to pay $10,000 today for an annual stream of payments of $2,300 for the next 10 years? nothing% (Round to two decimal places.) What are you getting in terms of interest rate if you are willing to pay $10,000 today for an annual stream of payments of $2,300 for the next 20 years? nothing% (Round to two decimal places.) What are you getting in terms of interest rate if you are willing to pay $10,000 today for an annual stream of payments of $2,300 for the next 50 years? nothing% (Round to two decimal places.) What are you getting in terms of interest rate if you are willing to pay $10,000 today for an annual stream of payments of $2,300 forever? nothing%…
1) What is the future value of $5480 6 years from now at 7 percent? 2) What is the future value of $2100 saved each year for 9 years at 10 percent? 3) What is the amount a person would have to deposit today (present value) at 11 percent interest rate to have $8500 saved 9 years from now. 4) What is the amount you would have to deposit today to be able to take out $2070 a year for 2 years from an account earning 14 percent. 5) If you desire to have $38300 for a down payment for a house in 11 years, what amount would you need to deposit today? Assume that your money will earn 4 percent. 6) If you desire to have $38300 for a down payment for a house in 11 years, what amount would you need to deposit today? Assume that your money will earn 4 percent. 7) Carla Lopez deposits $11100 a year into her retirement account. If these funds have an average earning of 3 percent over the 14 years until her retirement, what will be the value of her retirement account? 8) If a person spends $28 a week…
An investment promises the following payments: March 3 $1000; March 18 $2000; March 26 $30000 If the market interest rate is 7.3%, compounded daily, what is this investment value on March 28? What is this investment value on March 18? If you believe your required return for this investment should be 8%,compounded daily how much are you willing to pay for this investment on March 1?

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What is the current value of a security that pays $165,500 per year for 10 years if similar investments now earn 10%. $1,016,931.30 $1,116,931.30 $1,006,931.30 $1,216,931.30