Essay on Fin 439 Case 92

a) Assuming the opportunity interest rate is 6%, what is the present value of the second alternative?

7. Trevor's Tires is offering a set of 4 premium tires on sale for $550. The credit terms are 24 months at $20 per month. What is the interest rate on this offer?

13. What is the formula for the Present Value (PV) for a finite stream of cash flows (1 per year) that lasts for 10 years?

b. If you inherited $100,000 today and invested all of it in a security that paid an 8% rate of return, how much would you have in 15 years?

b. What will its future value be if the CD pays 5 percent interest? If it pays 15 percent interest?

In Question 6, the payment occurs at the beginning of each period rather than at the end, this type of annuity is named as annuity due.

a. What would Mrs. Beach have to deposit if she were to use high quality corporate bonds an earned an average rate of return of 7%.

A. The interest rate to use is the nominal rate, assets are the discounted sum of their future values, and expected

– I estimate that the amount needed upfront to reach 1 million dollars at the retirement age of 60 is $139,000, with a monthly contribution of

21. If you invested $100,000 in a one year certificate of deposit that pays 5% interest compounded semiannually, what would be your balance after one year (rounded)?

Euros to be received in 8 years = 12 million Euros – 7 million Euros = 5 million Euros

(TCO 3) Linda invested $15,000 today, in an investment that pays 6.50 percent interest, compounded semi-annually. Which one of the following statements is correct concerning this investment?

B. Now assume that Year 6 cash flows are forecasted to be $900,000 in the stepping-stone year and are expected to grow at an 8 percent compound annual rate thereafter. Assuming that the investors still want a 40 percent rate of return on their investment, calculate the venture’s present value.

b) & c) With a same $18,000 investment, in order to earn $35,000 after 6 years, how the nominal interest rates of the First National Bank differ if coumpounded annually, semiannually, quarterly and daily?

1. Assume that at retirement you have accumulated $825,000 in a variable annuity contract. The assumed investment return is 5.5% and your life expectancy is 18 years. What is the hypothetical constant benefit payment?