Finances
Answer the following questions:
1. The Lexington Property Development Company has a $10,000 note receivable from a customer due in three years. How much is the note worth today if the interest rate is a. 9%? b. 12% compounded monthly? c. 8% compounded quarterly? d. 18% compounded monthly? e. 7% compounded continuously?
SOLUTION: PV = FV [PVFk,n] a. PV = $10,000 [PVF9,3] = $10,000 (.7722) = $7,722 b. PV = $10,000 [PVF1,36] = $10,000 (.6989) = $6,989 c. PV = $10,000 …show more content…
Note: In parts c and d, be sure to give your answer as the annual nominal rate.
SOLUTION: FV = PV [FVFk,n] a. $555 = $500 [FVFk,1] FVFk,1 = 1.1100 k = 11% b. $2,078.66 = $1,850.00 [FVFk,2] FVFk,2 = 1.1236 k = 6% c. $1,114.46 = $750.00 [FVFk,20] FVFk,20 = 1.4859 k = 2% knom = 8% d. $21,364.24 = $12,500.00 [FVFk,36] FVFk,36 = 1.7091 k = 1.5% knom = 18%
4. How much will $650 per year be worth in eight years at interest rates of a. 12% b. 8% c. 6%
SOLUTION: FVA = PMT [FVFAk,n] a. FVA = $650 [FVFA12,8] = $650 (12.2997) = $7,994.81 b. FVA = $650 [FVFA8,8] = $650 (10.6366) = $6,913.79 c. FVA = $650 [FVFA6,8] = $650 (9.8975) = $6,433.38
5. What would you pay for an annuity of $2,000 paid every six months for 12 years if you could invest your money elsewhere at 10% compounded semiannually?
SOLUTION: FVA = PMT [FVFAk,n] $279,600 = $7,500 [FVFAk,15] FVFAk,15 =

Corporate Finance
1665 Words  7 Pagesthe possibility of bankruptcy or default, and less earnings are available to meet interest payments, and that the business is more vulnerable to increases in interest rates. 3. Total Debt ratio: it shows how much the company relies on debt to finance assets. The debt ratio gives a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. For 2011= 0.5 and for 2010= 0.417. We can see that the ratio increased, which means the greater the risk associated…

Essay on Finance
1807 Words  8 PagesFinance Wikipedia's accurate definition of finance is "The activity of finance is the application of a set of techniques that individuals and organizations (entities) use to manage their financial affairs, particularly the differences between income and expenditure and the risks of their investments" http://en.wikipedia.org/wiki/Finance. I discuss the importance of keeping track and updating financial reports as well as simple bank statements. These are just some of the essentials that I believe…

Finance
1042 Words  5 Pagesn = 6.99yrs P310)  Liliana Alvarez’s employer offers its workers a twomonth paid sabbatical every seven years. Liliana, who just started working for the firm, plans to spend her sabbatical touring Europe at an estimated cost of $25,000. To finance her trip, Liliana plans to make six annual endofyear deposits of $2,500 each, starting this year, into an investment account earning 8% interest. A).  Will Liliana’s account balance at the end of seven years be enough to pay for her trip?…

Finance Project
3247 Words  13 PagesSpring 2014 Principles of Finance Final Project General Motors Company vs Ford Motor Company Lauren Grippo GENERAL MOTORS CORPORATION (COMPANY) General Motors Corporation (General Motors or GM) was incorporated on August 11, 2009. Also known as GM, the company designs, builds and sells cars, trucks and automobiles parts globally and headquartered in Detroit, Michigan. The company also provides automotive financing services through General Motors Financial Company, Inc. (GM Financial). The…

Finance Assignments
1084 Words  4 Pagesexpected return of the market and the beta coefficient that represents the volatility of that asset. The following equation formulates this information into a cohesive mathematical relationship that numerically describes the CAPM: According to Yahoo Finance, the current beta coefficient for the Caterpillar Inc (CAT) stock is 1.86. Since the beta is the measurement of volatility in relation to the market, and its relatively high volatility, CAT does carry some risk with it if I were to decide to include…

Finance and Debt
654 Words  3 PagesHow should PDVSA finance the development of the Orinoco Basin? What are the costs and benefits of using project finance instead of traditional internal debt finance? PDVSA should think about financing the development of the Orinoco Basin by using project finance. The company (PDVSA) is looking forward to the financing of a publicprivate “chain” of deals between PDVSA and other foreign organizations that posses technological knowhow, crude oil marketing capacity and creditworthiness, to develop…

Finance Assignment
1755 Words  8 Pagesretirement account. She made her first such saving deposit into this fund on her 35th birthday. Dominique has also retired and wants to figure out how much money she has in her retirement account for her retired life. You are Dominique's friend who knows finance. How much is Dominique's savings worth today given that the fund has earned an annual return of 5.5%? (Enter just the number without the $ sign or a comma; round off decimals.) Answer for Question 3 Question 4 (5 points) Marcel has just graduated…

Source of Finance
3105 Words  13 PagesIdentify and describe the various sources of finance 1.1 Internal source 1.2 External sources 2. Assess the implication of the difference sources of finance related to risk, legal, financial and dilution of control and bankruptcy 2.1 Issue debt 2.2 Issue equity 3. Select appropriate sources of finance and make recommendations on the best ways of raising finance TASK 2: Part 1: Assess and compare various costs involve with each source of finance to Vale filters Limited Part 2: Prepare cash…

Functions of Finance Executive, Finance Treasurer & Finance Controller
3200 Words  13 PagesFinancial Management    Functions of Finance Executive, Finance Treasurer & Finance Controller    3/16/2012…

Finance Problems
1555 Words  6 PagesFinance Problems Present value is the amount of money required today to produce, using prevailing interest rates, a given amount of money in the future. Future value is the amount of money in the future that a certain amount of money today will yield, given prevailing interest rates. Time value of money calculations are useful for retirement planning purposes. If one assumes that a given amount will be available upon retirement, then one can determine the present value of that future amount.…
More about Finances

Corporate Finance
1665 Words  7 Pages 
Essay on Finance
1807 Words  8 Pages 
Finance
1042 Words  5 Pages 
Finance Project
3247 Words  13 Pages 
Finance Assignments
1084 Words  4 Pages 
Finance and Debt
654 Words  3 Pages 
Finance Assignment
1755 Words  8 Pages 
Source of Finance
3105 Words  13 Pages 
Functions of Finance Executive, Finance Treasurer & Finance Controller
3200 Words  13 Pages 
Finance Problems
1555 Words  6 Pages