3. Grigor's bank makes payments continuously at a rate of 50,000 a year. The payments are made between 7 and 11 years. Find the current value of these payments at time 3 using an annual rate of discount of 6.25%.

3. Grigor's bank makes payments continuously at a rate of 50,000 a year. The payments are made between 7 and 11 years. Find the current value of these payments at time 3 using an annual rate of discount of 6.25%.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

See similar textbooks

Related questions

Q: Glenna Gayle common stock sells for $55, and dividends paid last year were $1.35. Flotation costs on…

A: Stock Price (MP)=$55Last year Dividend (D))=$1.35Flotation cost=$4.40Growth rate=10%Required:Cost of…

Q: U3 Company is considering three long-term capital investment proposals. Each investment has a useful…

A: The payback period is the time it takes for a business to recoup the money originally invested in…

Q: The table below shows the closing monthly stock prices for IBM and Amazon. Calculate the exponential…

A: MonthsIBMAMZNJanuary$172.04$606.16February174.89617.72March185.17581.12April201.13545.70May194.77520…

Q: Barne plc is considering production and sale of a new type of coffee machine. This will allow them…

A: In this case, we will discuss the capital investment appraisal measures used and on that basis a…

Q: The spot price of oil is $40 per barrel and the cost of storing a barrel of oil for one year is…

A: Data given:S0=$40 per barrelStorage cost payable at the year end=$3.30Risk-free interest rate =2.6%…

Q: A company has $2.5 million of sales today, SG&A costs of $2 million excluding depreciation, annual…

A: The break-even point is where all costs are covered including variable costs and fixed costs and…

Q: (a) If the promotional budget is limited to $27,400, how many commercial messages should be run on…

A: Please note that under Answering Guidelines, only 1 question can be solved. Since multiple questions…

Q: your future trading account have just bought your first HSI June 2023 futures contract today @…

A: In futures you do not have to whole money for trading but you can trade on some initial margin that…

Q: eBook Interest rates on 4-year Treasury securities are currently 5.1%, while 6-year Treasury…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: Accounting M11-8 (Algo) Calculating Net Present Value, Predicting Internal Rate of Return [LO 11-3,…

A: NPV : Npv is also known as Net present Value. It is a capital budgeting techniques which help in…

Q: If you had invested $100 in these markets at the very beginning of 1988, how much money would you…

A: Return on investment refers to cash or return generated by use of funds in form of interest or time…

Q: Find the duration of a bond with a settlement date of May 27, 2023, and maturity date November 15,…

A: Duration of bond show that how much is the change interest rate have effect on the prices of bonds…

Q: A couple will retire in 50 years; they plan to spend about $26,000 a year (in current dollars) in…

A: Years to retire = 50Retirement period = 25 yearsAnnual expense during retirement = $26,000Interest…

Q: Consider a chooser option that you may choose whether the option is a put (with expiration T = 2) or…

A: The chooser option refers to a type of option where the holder has the choice to convert the option…

Q: A firm invests $10.70 million in a new stamping machine. It depreciates straight-line for tax…

A: It is a problem that requires the calculation of the present value of tax savings due to…

Q: CAMZ Co.'s future earnings for the next four years are predicted below. Assuming there are 500,000…

A: We'll multiply the earnings by the payout ratio to determine the dividend amount for each year.1st…

Q: Tyrone Company wants to purchase a property that costs $150,000. The full amount needed to finance…

A: Present Value = $150,000Interest rate = r = 12%Time = t = 6 years

Q: If the CAPM were to hold, how would you identify the more risk averse investors?

A: If the Capital Asset Pricing Model (CAPM) were to hold, you could identify more risk-averse…

Q: If you invest $2,700 today at an interest rate of 3.83 percent, compounded daily, how much money…

A: Future value refers to the value of current asset at future date with principal amount and…

Q: Top management of Markel Company is considering whether to lease or purchase an aircraft to…

A: The PV of the cash flows refers to their cumulative value after they have been discounted to the…

Q: You purchase one put option contract on AMD with an exercise price of $100 for a premium of $3.7.…

A: A put option is a financial arrangement that provides the buyer the right, & not the obligation,…

Q: Describe in detail and critique two of the following “savings” ideas(include works cited):…

A: Timeline vs Intensity (Afford Anything):According to the Timeline vs. Intensity idea, which was made…

Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…

A: Variance Portfolio:The portfolio with the lowest variance is one that includes risky assets and in…

Q: .r.w.a.n. .F.o.o.t.w.e.a.r. .w.i.s.h.e.s. .t.o. .a.s.s.e.s.s. .t.h.e.. .v.a.l.u.e. .o.f. .i.t.s.…

A: The value of the company can be found out as present value of free cash flow of the company and…

Q: A company has decided to issue a 120-day bank-accepted bill to raise additional funding of $250 000…

A: Face value refers to the nominal value issued by the authority for the value of security. It…

Q: Cost of goods sold Net income Cash flow from operations Cash Marketable securities Accounts…

Q: Discount loan. Up-Front Bank uses discount loans for all its customers who want one-year loans.…

A: The discount loan refers to a loan where the amount to be repaid is fixed and the amount provided to…

Q: Tree Row Bank has assets of $150 million, liabilities of $135 million, and equity of $15 million.…

A: Introduction:Duration gap: It is the difference between the average duration of assets and the…

Q: A bond's credit rating provides a guide to its risk. Suppose that long-term bonds rated Aa currently…

A: The credit rating of a bond assesses its default risk. A higher credit rating indicates lower…

Q: How can a company offset risk using interest rate swaps?

A: Interest rate swaps means swapping the rate of interest between 2 counter-parties.It can be used to…

Q: Subject : - Finanace An investor bought 10 shares of stock T for $800 per share. One year…

A: Total number of shares=10The purchase price per share=$800Sale price per share=$575Require:Return on…

Q: 2. Protecting Interest Income/Revenue • From the banker’s point of view, when the banker quotes a…

A: Interest Rate Risk - The impact on the earning, decrease in value of the assets or increase in…

Q: What is the expected return of the optimal stock portfolio?

A: First let us note the formula used to determine the expected return and risk of the portfolio.

Q: First Quality, Inc is investigating a project with a projected investment of $325,000 at year 0,…

Q: Highlight the relevance of portfolio theory in understanding nature of investments and effective…

A: Portfolio theory, developed by Harry Markowitz in the 1950s, is highly relevant in understanding the…

Q: WHAT INTEREST WILL PRODUCE A CAPITAL OF $25,000 AT 16.169% SEMI-ANNUAL IN 4 YEARS A) S 60323.8 B)…

A: Future value refers to a concept of time, the value of money used for estimating the value of a…

Q: 2,- HOW MUCH WILL A CAPITAL OF $10000 AT 18% OF CAPITALIZABLE INTEREST PRODUCE SEMESTER IN 5 YEARS…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: Using the binomial call option model to find the current value of a call option with a $25 exercise…

A: Hedge ratio refers to the comparison protected through the use of hedge position with the entire…

Q: Western Gas & Electric Co. (WG&E) had sales of $1,550,000 last year on fixed assets of $270,000.…

A: Sales = $1,550,000Fixed assets = $270,000Fixed assets capacity = 94%

Q: You are considering an investment that will pay $24668 in 20 years. If the interest rate is 13.79%,…

A: Present value of future cash flow is computed by following formula-PV = FV ÷ (1+r)nWhere,PV =…

Q: Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 9%…

A: Given information,Par value: $ 1,000Time to maturity: 10 yearsCoupon rate: 9 %Current market price:…

Q: According to the expectations theory of the term structure of interest, if the 1-year bond rate…

A: Expectation theory of the term of interest structure refers to the expectation of investors to earn…

Q: A 15-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate…

A: A bond is a kind of debt security that the government and private companies issue to raise funds…

Q: A $290.000 issue of eight-year bonds redeemable at par offers 56% coupons payable quarterly. What is…

A: A bond refers to an instrument used by the issuing company to raise debt capital from…

Q: A company is planning to invest $50,000 for equipment to result in an annual revenue of $17,000 with…

A: Investment's Present worth refers to the net present value of the investment. Net present value is…

Q: Debit ratio i got 0.220156 it would 22.0% however saying its incorrect

A: Total current debt 2013 = $74990The long-term debt 2013 = $149,900Total assets = $408,300

Q: Absalom Energy’s 9% coupon rate, semiannual payment, $1,000 par value bonds that mature in 10 years…

A: Coupon rate = 9%Par value = $1000Maturity = 10 yearsCallable period = 9 yearsCallable Price =…

Q: Finance suppose you work for apple, inc. an American multinational technology company headquartered…

A: Internal rate of return is the modern method of capital budgeting that is used to determine the…

Q: Kingston, Inc. has evaluated a project that will cost the company $250,000. The project will provide…

A: Payback Period is the period in which cash outflow of the company is recovered from cash inflows. In…

Q: Calculate the monthly payment by table lookup and formula. (Answers will not be exact due to…

A: We need to calculate monthly payment by using loan amortisation formula below.WherePMT =periodic…

Question

3. Grigor's bank makes payments continuously at a rate of 50,000 a year. The payments are made
between 7 and 11 years. Find the current value of these payments at time 3 using an annual rate
of discount of 6.25%.

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1: Explain the concept

VIEW

Step 2: List the data given

VIEW

Step 3: Calculate the Current value at time 3

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Money Management and Achieving Financial Goals

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

If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
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?
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?
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.
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
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.
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?