You are thinking of building a new machine that will save you $4,000 in the first year, The machine will then begin to wear out so that the savings decline at a rate of 3% per year forever. What is the present value of the savings if the interest rate is 3% per year? The present value of the savings is $ (Round to the nearest dollar.)

You are thinking of building a new machine that will save you $4,000 in the first year, The machine will then begin to wear out so that the savings decline at a rate of 3% per year forever. What is the present value of the savings if the interest rate is 3% per year? The present value of the savings is $ (Round to the nearest 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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Find the required value for each problem. Show the formula used and the counts for each problem. 6. How much more would you earn in three years if you invest $ 10,000 at a compound annual interest rate of 5.75%, instead of at a simple interest rate of 5.75%? 7. What would be the compound annual interest rate you would need to double your investment of $ 1,000 in three years? 8. If your bank pays you 5% annual interest, compounded monthly, how much would you have in ten years if you invest $ 1,000 today? 9. How much would you have to deposit today in a bank account that pays 9.25% annual interest, compounded quarterly, if you expect to have $20,000 at the end of five years? 10. Suppose you invested $ 2,500 in the business that a friend opened and in three years this friend returned $ 3,700 to you. How much was the return on your investment in your friend's business?
(Use Calculator or Formula Approach) Suppose you have $500 to invest and you believe that you can earn 8% per year over the next 15 years. How much would you have at the end of 15 years using compound interest?
Suppose you invest $200 a month for 6 years into an account earning 9% compounded monthly. After 6 years, you leave the money, without making additional deposits, in the account for another 20 years. How much will you have in the end? $ Suppose instead you didn't invest anything for the first 6 years, then deposited $200 a month for 20 years into an account earning 9% compounded monthly. How much will you have in the end?
You’d like to buy a small ranch when you retire in 38 years. You estimate that in 38 years you’ll need $9 million to do so. If your savings can earn 1.0% per month, how much will you need to save each month (for 38 years), starting next month, in order to reach your goal? Round to the nearest cent. [Hint: We are trying to solve for the cash flows of an annuity. The formula we need to use is dictated by whether we are given the PV or the FV of that annuity. Also, we are given the monthly interest rate, which is i/m in our formulas.]
Please advise on these time value of money practice problems. How would you solve these using a financial calculator? What values would you enter for N, I/YR, PV, PMT, and FV ? a) Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?
You are considering a safe investment opportunity that requires a $1,410 investment today, and will p $780 two years from now and another $830 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pa an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR wit the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is %. (Round to two decimal places.)
You have an opportunity to make an investment that will pay $ 300 at the end of the first year, $ 100 at the end of the second year, $ 200 at the end of the third year, $ 400 at the end of the fourth year, and $500 at the end of the fifth year. a. Find the present value if the interest rate is 9 percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the =NPV function in Excel or to use your CF key on a financial calculator —but you'll want to check your calculator's manual before you use this key. Keep in mind that with the =NPV function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that CF0 is the initial outlay or cash flow at time 0, and, because there is no cash flow at time 0, CF0 =0.) b. What would happen to the…
can somebody help me？ thanks K means compound k times a year.
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.84% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.) $ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) $ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)
I am having trouble solving this problem. Can you please provide me with some help? Thank you. I appreciate it. What is the value of a promise to receive $20 5 years from today, growing by 4% forever, if the interest rate is 10% per year?
Hello. I am stuck on this question, how can i solve it using formulas How much will you have at the end of 20 years if you invest $100 at the end of themonth starting a month from today and subsequently you invest 0.6% more each month.The interest rate is stated as an annual rate of 15% compounded monthly?
Based on the framework in the previous two problems, you have found that you need to have a total of $1,529,499 in savings at the time you retire, in 40 years. You currently only have $28,118 saved up in your retirement accounts. If you anticipate that your 80/20 investment portfolio will return an average of 8.31% per year, how much extra must you save every year to reach your goal? Assume that you'll be saving the extra amount by the end of each year.

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