A contractor bought a concrete mixer at P 150,000 if paid in cash. The mixer may also be purchased by installment to be paid within 5 years. If money is worth 8% compounded annually, what is the amount of each annual payments are made at the beginning of each year. P 34,786 P 24,786 P 27,828

A contractor bought a concrete mixer at P 150,000 if paid in cash. The mixer may also be purchased by installment to be paid within 5 years. If money is worth 8% compounded annually, what is the amount of each annual payments are made at the beginning of each year. P 34,786 P 24,786 P 27,828

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 8P

See similar textbooks

Related questions

Q: Geet Marketing is acquiring Tusk Co. for $565,000 in cash. Tusk has fixed assets with a book value o...

A: Goodwill is the difference of amount paid for acquiring the company and the net assets acquired.

Q: Peter makes a deposit at the end of every month into a savings account that earns interest at 5.4% c...

A: A series of equal payments at equal intervals of time is called annuity. Pension payments, mortgage ...

Q: Rebecca borrows P60000 at 12% compounded annually, agreed to repay the loan in 15 equal payments. Co...

A: When a loan is taken, it is repaid in equal installments. The amount paid comprises of interest comp...

Q: what is the equivalent percent of 20% compounded quarterly if converted to compounded monthly.

A: Interest rate (r) = 20% Number of compounding per year (n) = 4 Effective annual interest rate = [1+(...

Q: Luke earned P4200 in interest from his simple interest account over the last 3 years. The account pa...

A: Simple interest (I) = P4200 Period (t) = 3 Years Interest rate (r) = 1.75%

Q: The DPWH expects the cost of maintenance for a particular piece of heavy equipment to be P 50,000 in...

A: Present worth (PW) is a sum of PV of all the cashflows. Discounting is a technique which is used to ...

Q: You observed a stock moves 2% stdev each day usually, except for days of earning announcement. In th...

A: Stock prices move on a daily basis due to market dynamics. This indicates that stock prices change a...

Q: 5. William needs to take out a loan for $2,400. Which of these payment plans would have William payi...

A: The question is based on the concept of loan operation and the charge of interest on the payment. T...

Q: 6. What size monthly payments should occur when $10,000 is borrowed at 6% per year compounded semian...

A: Borrowings: Borrowings are the loan which is taken by the individual to meet its financial requirem...

Q: 29. A man deposits P200 at the beginning of each month in a bank credits savings account with 5% com...

A: We need to use future value of annuity due formula to calculate saving amount at the end of 4 years....

Q: A dam project of the Philippine Government was estimated to cost Php 340000000 during its constructi...

A: First cost (F) = Php 340,000,000 Annual cost (A) = Php 2,000,000 Repairing cost every 10 years (R) =...

Q: You need a home loan of $95,000 after your down payment. How much will your monthly house payment be...

A: Loan amount (PV) = $95000 Interest rate = 6.25% Monthly interest rate (r) = 6.25%/12 = 0.52083333333...

Q: Refers to the inability of the business to meet its obligations as they mature on account of insuffi...

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one...

Q: Gold is currently trading at $1,645.50 per ounce with a carrying cost price of $1,693.97 per ounce f...

A: Trading profit is the same as operating profit. As a result, it excludes any financing-related reven...

Q: You want to buy a motorcycle for $11,500 plus freight of $145 and other delivery charges of $125. Yo...

A: Cost = $11500 Freight = $145 Delivery charges = $125 Total cost = 11500+145+125 = $11770 Down paymen...

Q: A $1,000 face value, 6.4% coupon bond pays interest semi-annually and matures in ten years. It has ...

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only on...

Q: 9. Money is mvested at 10.5% nommal annual rate. Interested is compounded monthly. How much will $15...

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only on...

Q: A certain annuity pays 80.00 at the end of every 3 months. If the present value of the annuity is 1,...

A: Periodic annuity payment (A) = 80 Payment frequency = quarterly Let r = Quarterly rate n = Total qua...

Q: List each of the key financial statements and identify the kinds of information they provide to corp...

A: Note : As per the guidelines, only first question will be answered. Kindly post the remaining parts ...

Q: You are looking to buy a $350,000 home Your household has a combined income of $97,000 The interes...

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first t...

Q: What is the ‘intrinsic value’ of a stock and what does it tell us?

A: Intrinsic value refers to a company's, stock's, currency's, or product's expected or calculated valu...

Q: A new civil servant is confused about choosing an alternative to procure a motorbike that costs $128...

A: Here, Cost of Bike is $128,761,000 Down Payment to Dealer is $5,000,000 Monthly Installment to deale...

Q: etirement for 20 years, a self-employed engineer deposits P6,000 every end of 3 months in a fund tha...

A: Given information : Time period (years) 20 Periodic deposits 6000 Payment quarterly Intere...

Q: Clark borrows P 600,000 at 15% compounded annually agreeing to repay the loan in 15 equal payments. ...

A: Loan amount (PV) = P600,000 Interest rate (r) = 15% Number of payments (n) = 15

Q: How long will it take to double your savings if you earn 3.6 percent interest, compounded annually? ...

A: The number of years required can be solved with the help of NPER function of Excel

Q: What's the market price for a $100,000 Par, 3.25% Coupon bond with 18 years to maturity that is yiel...

A: Given, Par value of bond $100,000 Coupon rate is 3.25% term to maturity is 18 years YTM 1.79%

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

A: The exponential three-month moving average for the month of March = (2/3) * Closing stock price of M...

Q: How do I compute the excess present value index for each of the five proposals? (Rounding answers to...

A: pv index= pv of cash inflows /pv of cash outlfows

Q: Sewing World has an all-equity cost of capital of 11.72 percent, a levered cost of equity of 12.94 p...

A: A firm raises finance from various sources typically debt and Equity. The ratio of debt finance to E...

Q: Which of the following is the most advantageous for a debtor if he borrowed P15, 000 at 6% from Marc...

A: Interest is the additional money that a person earns on his or her investment. It is an additional a...

Q: What is the monthly payment on a loan of $5,000 at APR = 6% for 4 years.

A: Loan amount (LV) = $5000 Interest rate = 6% Monthly interest rate (r) = 6%/12 = 0.50% Period = 4 Yea...

Q: A man deposits P5,000 at the end of every year earning 7.50% compounded continuously. Determine the ...

A: Annual deposit (P) = P5000 Interest rate = 7.50% e = 2.7182818284590452353602874713527 Annual intere...

Q: An increase in Accounts Receivables is : a A negative item for calculating Operating Cash Flow b ...

A: Accounts receivables is that amount of the total sales which customers still owe to the firm.

Q: What lump sum of money must be deposited in a bank account at present time so that P 500 monthly can...

A: An annuity is a sequence of payments or deposits occurring at equal intervals of time for a given in...

Q: Men's Place has 21,000 shares of stock outstanding with a par value of $1 per share and a market val...

A: Market capitalization = Shares outstanding x Market value per share = 21,000 x 27.18 ...

Q: Which is a better choice in buying a washing machine worth ₱12,700.00? A. Avail of the instalment p...

A: From all options, let's find the interest charged. For option A, n = 18 months Monthly payment (M) =...

Q: Tulld wortn today? (See Problem 3.) 4.3 Calculating Rates of Return You've been offered an investmen...

A: Assuming Investment = 100 Future Value = 2 times of investment = 2*100 = 200 N = 12

Q: The present worth of P 40,000 in the first year and amounts of decreasing by P 3000 per year through...

A: First year amount = P 40,000 Annual decrease = P 3000 Interest rate = 14% Period = 5 Years

Q: Which of the following statements regarding the valuation of property for the purpose of applying th...

A: The tax that is levied on transferring the property as a gift by inheritance in which there is an ag...

Q: Peter makes a deposit at the end of every month into a savings account that earns interest at 5.4% c...

A: An annuity is used to make regular payments in exchange for a lump-sum initial payment. It is usuall...

Q: most recent dividend paid by Dangote cement Zambia shares is K4 per share. The company has adopted a...

A: Constant growth model is used to determine the intrinsic value of stock. In this it is assumed that ...

Q: rimary e

A: Introduction : In simple words, financial ratio refers to the study of different ratios of a firm to...

Q: Falafel Hut has sales of $512,630. The cost of goods sold is equal to 60 percent of sales. The begin...

A: The accounts receivable are the current assets of the company. The increase in the credit sales or t...

Q: Forward premiums/discounts with bids/asks. Referring to the following spot and forward bid-ask rates...

A: Here,

Q: MODIGLIANI & MILLER PROPOSITIONS A certain firm with no debt that operates in perfect capital market...

A: Ru = 7.5% Rd = 5% Let Re = ROE with leverage

Q: get the effective rate of interest if the bank provides nominal rate of 6% a. monthly b. daily c...

A: The effective annual rate of return can be calculated with the help of EAR formula

Q: Suppose that the required reserve ratio in the economy is 7% and that commercial banks hold excess r...

A: The deposit multiplier is the most money a bank may make for each unit of reserves. Typically, the d...

Q: Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 4.35% (annual coup...

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

Q: Aluminum maker Alcoa has a beta of about 1.93, whereas Hormel Foods has a beta of 0.31. If the expec...

A: The term Beta ascertains the performance of an asset or security and change in the movement of the s...

Q: 11 and 12

A: EBITDA: Earnings before interest and tax and depreciation and amortization refer to the financial pe...

Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

Question

A contractor bought a concrete mixer at P 150,000 if paid in cash. The mixer may
also be purchased by installment to be paid within 5 years. If money is worth 8%
compounded annually, what is the amount of each annual payments are made at
the beginning of each year.
P 34,786
P 24,786
P 27,828
O P 37,828

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

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

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

Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan? A. $94,000 B. $80,000 C. $23,500 D. $14,000
Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of 5,000 at the end of each of the next 5 years. Assume a prevailing interest rate of 15%. The present value of an ordinary annuity of 1 at 15% for 5 periods is 3.35. The future amount of an ordinary annuity of 1 at 15% for 5 periods is 6.74. The present value of 1 at 15% for 5 periods is 0.5. How much should Electro record as the cost of the machine? a. 12,500 b. 16,750 c. 25,000 d. 33,700
Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.
Sharapovich Inc. borrowed $50,000 from Kerber Bank and signed a 5-year note payable stating the interest rate was 5% compounded annually. Sharapovich Inc. will make payments of $11,548.74 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.
Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Halep Inc. will make payments of $8,264.70 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.
Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.
Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On November 6, Pickles borrows $820,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in six months from November 6, and annual interest rate of 3%. B. On December 12, Pickles borrows an additional $200,000 with payment due in three months from December 12, and an annual interest rate of 10%. C. Pickles pays its accounts in full on March 12, for the December 12 loan, and on May 6 for the November 6 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Pickles.
Samuel Ames owes 20,000 to a friend. He wants to know how much he would have to pay if he paid the debt in 3 annual installments at the end of each year, which would include interest at 14%. Draw a time line for the problem. Indicate what table to use. Look up the table value and place it in a brief formula. Solve.
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
Next Level Potter wishes to deposit a sum that at 12% interest, compounded semiannually, will permit 2 withdrawals: 40,000 at the end of 4 years and 50,000 at the end of 10 years. Analyze the problem to determine the required deposit, stating the procedure to follow and the tables to use in developing the solution.
Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in three months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on February 24, and the entry for payment of the short-term note and final interest payment on April 24. Round to the nearest cent if required.
Dexter Construction Corporation is building a student condominium complex; it started construction on January 1, Year 1. Dexter borrowed 2.5 million on January 1 specifically for the project by issuing a 10%, 5-vear, 2.5 million note, which is payable on December 31 of Year 3. Dexter also had a 12%, 5-year, 3 million note payable and a 10%, 10-year, 1.8 million note payable outstanding all year. Calculate the weighted average interest rate on the non-construction-specific debt for Year 1. RE10-9 Refer to RE10-8. In Year 1, Dexter incurred costs as follows: Calculate Dexters weighted average accumulated expenditures.