Capital Budgeting Npv

Poor Dog, Inc. borrowed $135,000 from the bank today. They must repay this money over the next six years by making monthly payments of $2,215.10. What is the interest rate on the loan? Express your answer with annual compounding.

The amount of money that I had spent over one week ended up totaling $100.77. To come up with the amount of money that would be spent in a year if I spent $100.77 for 52 weeks, the total would be $5,240.04. Then to determine the amount of money that would be spent over 25 years, it would be $5,240.04 multiplied by 25 years, and that would be $131,001. That is $131,001 that I spent on completely unnecessary expenses. To determine what $131,001 would equal in todays money it requires to be plugged into an equation, PV=FV/(1+i)^n . “FV” stands for the future value, that is the value that we calculated by multiplying by 25 years, $131,001. The “i” stands for the interest

8. Karen has $16,000 that she wants to invest for 1 year. She can invest this amount at The North Bank and earn 5.50 percent simple interest. Or, she can open an account at The South Bank and earn 5.39 percent interest, compounded monthly. If Karen decides to invest at The North Bank, she will:

Interest earned now can be found from getting the difference between the principal and amount.

What is future value? The future value is an amount of money multiplied by the interest rate and the amount of time

If interest rates increased then future values would also increase but the present value decreases. Financial analysts recommend that individuals purchase annuities when the interest rates are higher because of the higher payout amount (Ritchie, n.d.). The formula to calculate future value (FV) is FV = P * (1 + R)n. If someone invested five thousand dollars for ten years with a 6% interest rate the FV is $10,272,32..

17. You have been told that you need $21,600 today in order to have $100,000 when you retire 42 years from now. What rate of interest was used in the present value computation? Assume interest is

You invest $1000 at 6% compounded annually and want to know how much money you will have in 5 years. What does the $1000 represent?

g. Based on a capital gains rate of 15%, how much money will you have to live on each year (assuming you do not touch the $500,000 in principal)?

After the calculations you end up coming out with a rate of 14.87%. The third and final part of question three asks what rate you will need if the interest is compounded semiannually. All you have to do is double the amount of terms and you will come out with a lower number of 7.177%. Since the interest is compounded semiannually that means that you will need to times that number by two and you come out with your final number of 14.35%.

14) An investment will pay you $100 in one year and $200 in two years. If the interest rate is 5%, what is the

Present value: John Hsu wants to start a business in 12 years. He hopes to have $130,000 at that time to invest in the business. To reach his goal, he plans to invest a certain amount today in a bank CD that will pay him 7.50 percent annually. How much will he have to invest today to achieve his target? (Round to the nearest dollar.)

Refer to question 9. What would the future value be if interest is compounded monthly?

If we were to use the example above with a 5% interest rate, and a present value of

The future value of money invested is calculated by adding the present value and the interest earned (interest equals to present value times the rate of the interest, and is represented as a percentage). However, the future value of money may also work against us when for example we pay with credit cards and we have to pay it off with the money from the future plus interest expense.