1. An investor deposits P10,000.00 at the end of each year in an account which gives a nominal annual interest of 5% compounded continuously. How much sum will he accumulate in 10 years? And Draw the cash flow diagram.

1. An investor deposits P10,000.00 at the end of each year in an account which gives a nominal annual interest of 5% compounded continuously. How much sum will he accumulate in 10 years? And Draw the cash flow diagram.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

See similar textbooks

Related questions

Q: When adding a risky asset to a portfolio of may risky assets, which property of the asset has a grea...

A: Portfolios can consist of a variety of investments such as equities, bonds, commodities, cash and ca...

Q: f you were asked to describe the terms of the Federal Reserve's Board of Governors, how would you ex...

A: Board of Governors The Board of Governors are also known as the Federal Reserve Board. They are the ...

Q: A building cost P8.5 million and the salvage value is P50,000 after 23 years. The annual maintenance...

A: The present worth analysis is an analysis where all the present values are calculated. All the disco...

Q: Silver Inc. will be registering with SEC. Its incorporators was able to gather the following cost of...

A: The minimum rate of return a company will seek while investing in a project is the weighted average ...

Q: Explain the lockbox system.

A: Lockbox banking is a service given by banks to businesses in order to receive payment from clients. ...

Q: Cross-Ocean Boats Ltd. is in the 30% tax bracket. It is interested in determining the minimum return...

A: The weighted average cost of capital expresses the return that both bondholders and shareholders dem...

Q: 5) In late November 2014, a car dealership in southern Wisconsin was offering a new 2014 Toyota Coro...

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first...

Q: DFB, Inc. expects earnings next year of $4.73 per share, and it plans to pay a $3.09 dividend to sha...

A: According to Gordon’s growth model, it is assumed that the market price of a share is calculated as ...

Q: f Average assets and capital are 900,000 and 540,000, respectively, with an ROE of 0.046, how much i...

A: Average Assets are 900,000 Capital is 540,000 ROE is 0.046

Q: An asphalt road requires no repairs until the end of 2 years. At the end of 3rd year, P90,000 will b...

A: Here, Here, From Year 1 to Year 2, Repair cost is P0 From Year 3 to Year 7, Repair Cost is P90,000 ...

Q: What is the difference between a budget deficit and a budget surplus?

A: A budget deficit is when the expenses outweigh the revenue brought in by a project. Conversely, a bu...

Q: DFB, Inc. expects earnings next year of $5.99 per share, and it plans to pay a $4.36 dividend to sha...

A: EPS1 = $5.99 D1 = $4.36 Let p = Payout ratio ROE = 14.8%

Q: Consider a forward contract that expires in 9 months. The underlying asset is worth $250 and the for...

A: Underlying price (S) = $250 r = 8% n = 9 months = 0.75 years

Q: Rolling Company bonds have a coupon rate of 6.00 percent, 24 years to maturity, and a current price ...

A: Solution:- Yield to maturity (YTM) of a bond means the rate of return the bond is yielding. We know,...

Q: Analyse Time Interest Earned ratio in 2019 is 4.89 and 2020 is 9.9

A: Solution:- We know, Times Interest Earned ratio means that how many times a firm earns its EBDIT to ...

Q: Krell Industries has a share price of $22.79 today. If Krell is expected to pay a dividend of 1.19% ...

A: Current stock price = $22.79 Dividend rate = 1.19% Growth rate = 23.33%

Q: Aloha, Inc., has 6 percent coupon bonds on the market that have 11 years left to maturity. If the YT...

A: Par value (FV) = 1000 Coupon rate = 6% Annual coupon amount (C) = 1000*0.06 = 60 Years to maturity (...

Q: Why do maximizing EPS and maximizing value not necessarily lead to the same conclusion about the opt...

A: Earning per share or EPS is referred as the net profit of the corporation, which are divided through...

Q: (b) A trader buys one May2022 futures contracts on frozen orange juice. Each contract is for the del...

A: Margin call is made in a situation where due to change in market price, the margin balance falls bel...

Q: A bond will sell at ____________ if the required return is greater than the coupon rate. Select one...

A: Required return relation with price and coupon rate If required return is greater than coupon rate t...

Q: Q4) a) Dimond 7 has been operating an excavation company in British Columbia for the last 20 years. ...

A: WACC stands for weighted average cost of capital. It represents a firm's average cost of capital fr...

Q: in a page long or 2 define debt and equity financing and the advantages and disadvantages of both. A...

A: Applying for a loan from a lender is what debt entails. It can be temporary, long-term, or revolving...

Q: EMC Corporation's current free cash flow of $370,000 and is expected to grow at a constant rate of 6...

A: Value of operations = FCF*(1+g)/(k-g) Where FCF = Free cash flow current g = growth rate k = Cost ...

Q: Motorhed Inc is currently trading at $8 per share with 2.5 billion shares on issue. It announces a 2...

A: Current price -$8 No of shares – 2.5 billion Total value of shares = 2.5*8 = $20 billion Right iss...

Q: On January 1, Year 1, you are considering the purchase of Niko Enterprises' common stock. Based on y...

A: The purchase price can be found using the Gordon Model. As per Gordon Model, the price of stock toda...

Q: The following statements relate to long-term financing. Which is true? a. The risk on any type of e...

A: Long term financing Long term financing is a financing that has the maturity more than a year.

Q: 5. Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be cons...

A: The risk-free rate is the interest rate an investor would get on an entirely risk-free investment ov...

Q: a. If interest rates suddenly rise by 2.2 percent, what is the percentage change in price of Bond A ...

A: Bond valuation refers to a method which is used to compute the current value or present value (PV) o...

Q: If an individual stock's beta is higher than 1, that stock is riskier than the market

A: If individual stocks beta greater than 1 has risker than market and more volatile. CAPM cost of equ...

Q: Life insurance premiums paid by the company on its officers and employees are considered permanent d...

A: Life insurance is a contract between the two parties like the corporation or the individual and an i...

Q: In a capital budgeting analysis, what is the cash outflow at time 0 (initial investment) that Beast ...

A: Net present value (NPV) of an alternative refers to the variance between the initial investment or p...

Q: Holly Homeowner bought a bungalow for $50,000 twenty years ago with a $20,000 down payment. The mont...

A: Annual effective percentage rate is the actual annual return earned by an investor on the asset sold...

Q: Bond J has a coupon of 6.4 percent. Bond K has a coupon of 10.4 percent. Both bonds have 20 years to...

A: Here,

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...

A: Formula's Calculations: Therefore; Cost of Debt is 5.53%

Q: A stock costs $80 and pays a $2 annual dividend. If you expect to sell the stock after four years fo...

A: The required return on the stock represents the total return earned on the stock. This return is con...

Q: * Shara Jane Mariano buys a 137,000 laundry business by paying 26,000 at the end of each year. At 8%...

A: The amortization table means a table showing the schedule of payments in each period including the i...

Q: Dorpac Corporation has a dividend yield of 1.2%. Its equity cost of capital is 7.5%, and its dividen...

A: Using Gordon’s growth model, the price of a share is calculated using the expected dividend, cost of...

Q: A government bond pays coupons at an annual rate of 6%. It has a nominal value of K100 and it will b...

A: Dirty price of a bond The bond price is called dirty price when it included the accrued interest. Ac...

Q: geometric average return on this stock

A: The geometric return shows the calculation of the average rate of return on investment compounded in...

Q: Perform the calculation for each ratio, and provide an explanation of the result. a. Return on equi...

A: Given: Particulars Amount Net income -$522,000 Accounts receivables $300,000 Current assets...

Q: A project starts with an initial capital outflow of RM450,000 in exchange for the following likely c...

Q: A project has the following cash flows. What is the internal rate of return? Years Cash flow -$46.80...

A: Solution:- Internal Rate of Return (IRR) is the rate of return which the bank is yielding. At IRR, N...

Q: Why is the NPV preferred over the IRR?

A: Net Present Value is a method of finding the profitability of a project by discounting future cash f...

Q: Summit Systems will pay a dividend of $1.48 this year. If you expect Summit's dividend to grow by ...

A: Expected dividend (D1) = $1.48 Growth rate (g) = 5.3% Cost of capital (r) = 10.7%

Q: Matt Corpn bonds mature in 8 years, have a par value of $1,000, and a coupon rate of 6.7%. The marke...

A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type]) Rat...

Q: Jose acquired a loan in the amount of 2 million pesos from Pedro. According to their agreement, Jose...

A: Loan is referred as the lending of the funds through one or more individuals, entities, or the organ...

Q: * Andrea Marie Ondivilla will pay her debt by 6 payments of 3,600 followed by 4 payments of 2,600. I...

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first...

Q: Which arrangement of the different modes of financing appropriately reflects the related cost of cap...

A: Highest cost capital modes of fiannacing is cost of equity.

Q: On the exercise date, Blue Corporation has a put option for 100 tons of copper at an exercise price ...

A: Put option is a right to sell an underlying security at a predetermined price at a future date.

Q: What is the present worth of a perpetual annuity of $2,000 each payable at the end of each year? Ass...

A: Perpetual Annuity is $2,000 Interest Rate (r) is 10% Compounding Period (m) is Quarterly i.e. 4 Paym...

Concept explainers

Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.

Question

PLEASE don't use excel for this. Show the
solution with formula needed.
ENGINEERING ECONOMICS using Annuity
1. An investor deposits P10,000.00 at the
end of each year in an account which
gives a nominal annual interest of 5%
compounded continuously. How much
sum will he accumulate in 10 years? And
Draw the cash flow diagram.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?