Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 2, Problem 21PS
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How much do you need to save each year for 30 years in order to have $775,000, assuming you are investing the money in an account that earns 8%?
How much of the $775,000 comes from contributions (your out of pocket costs)?
Future
value.
Jack and Jill are saving for a rainy day and decide to put
$70
away in their local bank every year for the next
25
years. The local Up-the-Hill Bank will pay them
10%
on their account.
a. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of
25
years?
b. Unfortunately, Jack had an accident in which he sustained head injuries after only
10
years of savings. The medical bill has come to
$1,000.
Is there enough in the rainy-day fund to cover it?
a. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of
25
years?
$nothing
(Round to the nearest cent.)
b. How much will they have in the account at the end of
10
years?
$nothing
(Round to the nearest cent.)
Is there enough in the rainy day fund to cover the medical bill? (Select the best response.)
A.
There is not enough information to…
Future value. Jack and Jill are saving for a rainy day and decide to put $45 away in their local bank every year for the next 25 years. The local Up-the-Hill Bank will pay
them 10% on their account.
a. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of 25 years?
b. Unfortunately, Jack had an accident in which he sustained head injuries after only 10 years of savings. The medical bill has come to $700. Is there enough in the
rainy-day fund to cover it?
.....
a. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of 25 years?
2$
(Round to the nearest cent.)
Chapter 2 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 2 - (FV) In 1880, five aboriginal trackers were each...Ch. 2 - Prob. 2SQCh. 2 - (PV) Your company can lease a truck for 10,000 a...Ch. 2 - (RATE) Ford Motor stock was one of the victims of...Ch. 2 - Prob. 5SQCh. 2 - Prob. 6SQCh. 2 - Prob. 8SQCh. 2 - (NOMINAL) What monthly compounded interest rate...Ch. 2 - Future values If you invest 100 at an interest...Ch. 2 - Discount factors If the PV of 139 is 125, what is...
Ch. 2 - Prob. 3PSCh. 2 - Prob. 4PSCh. 2 - Opportunity cost of capital Which of the following...Ch. 2 - Perpetuities An investment costs 1,548 and pays...Ch. 2 - Growing perpetuities A common stock will pay a...Ch. 2 - Prob. 8PSCh. 2 - Present values What is the PV of 100 received in:...Ch. 2 - Continuous compounding The continuously compounded...Ch. 2 - Compounding intervals You are quoted an interest...Ch. 2 - Future values and annuities a. The cost of a new...Ch. 2 - Prob. 13PSCh. 2 - Present values A factory costs 800,000. You reckon...Ch. 2 - Present values A machine costs 380,000 and is...Ch. 2 - Opportunity cost of capital Explain why we refer...Ch. 2 - Present values A factory costs 400,000. It will...Ch. 2 - Present values and opportunity cost of capital...Ch. 2 - Prob. 19PSCh. 2 - Prob. 20PSCh. 2 - Annuities David and Helen Zhang are saving to buy...Ch. 2 - Annuities Kangaroo Autos is offering free credit...Ch. 2 - Present values Recalculate the NPV of the office...Ch. 2 - Prob. 24PSCh. 2 - Prob. 25PSCh. 2 - Continuous compounding How much will you have at...Ch. 2 - Perpetuities You have just read an advertisement...Ch. 2 - Compounding intervals Which would you prefer? a....Ch. 2 - Compounding intervals A leasing contract calls for...Ch. 2 - Annuities Several years ago, The Wall Street...Ch. 2 - Prob. 31PSCh. 2 - Prob. 32PSCh. 2 - Prob. 33PSCh. 2 - Prob. 34PSCh. 2 - Prob. 35PSCh. 2 - Amortizing loans Suppose that you take out a...Ch. 2 - Prob. 37PSCh. 2 - Annuities Use Excel to construct your own set of...Ch. 2 - Declining perpetuities and annuities You own an...
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- i need helparrow_forwardFuture value. Jack and Jill are saving for a rainy day and decide to put $65 away in their local bank every year for the next 25 years. The local Up-the-Hill Bank will pay them 9% on tair account. a. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of 25 years? b. Unfortunately, Jack had an accident in which he sustained head injuries after only 10 years of savings. The medical bill has come to $900. Is there enough in the rainy-day fund to cover it? a. If Jack and Jill put the money in the account faithfully at the end of every year. how much will they have in it at the end of 25 years? (Round to the nearest cent.)arrow_forwardHow much does Herbert need to save each year for 10 years as a regular savings payment if he wants to retire in exactly 10 years with $1,023,000.00, can earn 13.13 percent on his savings, starts making regular savings payments in exactly 1 year, and saves an equal amount each year with one exception, which is that in 1 years, he plans to make an extra contribution of $30,600.00 to savings?(ROUND THE VALUE TO 0 DECIMAL AND ENTER THE POSITIVE VALUE)arrow_forward
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