Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years. Present Value of Cash Flow: It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

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Answer 1

Question

Chapter 5, Problem 24P

a.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

b.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate, quarterly compounding, and discounted back 5years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

c.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate , monthly compounding, discounted back 1year.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

d.

Summary Introduction

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

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A. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $200,000 for 20 years? Assume that the annuity will earn 10 percent per year.B. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year.C. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of five years. I need help solving question C on a financial calculator.

John wants to buy a property for $105,000 and wants an 80 percent loan for $84,000. A lenderindicates that a fully amortizing loan can be obtained for 30 years (360 months) at 6 percentinterest; however, a loan fee of $3,500 will also be necessary for John to obtain the loan.a. How much will the lender actually disburse?b. What is the APR for the borrower, assuming that the mortgage is paid off after 30 years (fullterm)?c. If John pays off the loan after five years, what is the effective interest rate? Why is it differ-ent from the effective interest rate in (b)?d. Assume the lender also imposes a prepayment penalty of 2 percent of the outstanding loanbalance if the loan is repaid within eight years of closing. If John repays the loan after fiveyears with the prepayment penalty, what is the effective interest rate?

It is now January 1. You plan to make a total of 5 deposits of $500 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 14% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. Round your answers to the nearest cent. 1. How much will be in your account after 10 years? 2. You must make a payment of $1,280.02 in 10 years. To get the money for this payment, you will make five equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 14% with quarterly compounding. How large must each of the five payments be?

Answer 2

Question

Chapter 5, Problem 24P

a.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

b.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate, quarterly compounding, and discounted back 5years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

c.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate , monthly compounding, discounted back 1year.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

d.

Summary Introduction

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

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Answer 3

Question

Chapter 5, Problem 24P

a.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

b.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate, quarterly compounding, and discounted back 5years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

c.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate , monthly compounding, discounted back 1year.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

d.

Summary Introduction

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

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Answer 4

Question

Chapter 5, Problem 24P

a.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

b.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate, quarterly compounding, and discounted back 5years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

c.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate , monthly compounding, discounted back 1year.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

d.

Summary Introduction

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

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Answer 5

Chapter 5, Problem 24P

a.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

b.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate, quarterly compounding, and discounted back 5years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

c.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate , monthly compounding, discounted back 1year.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

d.

Summary Introduction

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 6

Chapter 5, Problem 24P

a.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 7

Chapter 5, Problem 24P

a.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 8

b.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate, quarterly compounding, and discounted back 5years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 9

b.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate, quarterly compounding, and discounted back 5years.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 10

c.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate , monthly compounding, discounted back 1year.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 11

c.

Summary Introduction

To compute: Present value of $500 at 12% nominal rate , monthly compounding, discounted back 1year.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money thatis invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 12

d.

Summary Introduction

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 13

d.

Summary Introduction

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 5 - Prob. 1Q Ch. 5 - Explain whether the following statement is true or...Ch. 5 - If a firms earnings per share grew from 1 to 2...Ch. 5 - Would you rather have a savings account that pays...Ch. 5 - Prob. 5Q Ch. 5 - Prob. 6Q Ch. 5 - Banks and other lenders are required to disclose a...Ch. 5 - Prob. 8Q Ch. 5 - Prob. 1P Ch. 5 - PRESENT VALUE What is the present value of a...

Solution Summary: The author calculates the present value of 500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Concept explainers

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Want to see the full answer?

Chapter 5 Solutions

Solution Summary: The author calculates the present value of 500 at 12% nominal rate semiannual compounding, discounted back 5 years.

Concept explainers

To explain: Reason of difference in present value of part a andb. Present Value of Cash Flow: It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.

Want to see the full answer?

Chapter 5 Solutions

To explain: Reason of difference in present value of part a andb.

Present Value of Cash Flow:

It is also called as discounted value; it defines that amount of money that is invested at a given rate of interest will increases to the amount of future cash flow at that particular time in the future.