Npv Analysis

academic year interest rate of 3.76 percent would pay a 5,032 dollars interest over 10 years,

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.

1. A condo in Orange Beach, Alabama, listed for $1.4 million with 20% down and financing at 5% for 30 years. What would the monthly payment be?

15. The condominium at the beach that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment?

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?

d. If you can earn 9% per year, how much will you have to save each year if you want to retire in 40 years with $3 million?

What annual interest rate is needed to produce $200,000 after five years if only $100,000 is invested?

9. What is the present value of an 8-year annuity that makes quarterly payments of $73 if

10. An investment of $1,000 today will grow to $1,100 in one year. What is the continuously compounded rate of return?

If the present is Year 0 and rates compound annually, in what year does the first outlay of $45,000 occur? Hint, you’re using the perpetuity approach to valuation.

b. Assuming that you would only finance the truck for 4 years, how much would you need to put down to get your payment to $450.00?

The semi-annual compounded interest rate is 5.2% (a six-month discount rate of 5.2/2 = 2.6%). (15 points)

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?

First we need to get the present value of the annuity for the 1,500 semiannual PMTs at year 14

Assume that the annual payments in the sixth year is equal to the rental payment in the fifth year ( 112.9 and 86.0) and the remainder of the lump sum values (54.6 and 17.8) is due in the seventh year. With a discount rate of 5.4%, the present values of the rental payments for the years 2006 and 2007 are as follows: