A loan of Php20,000 is expected to yield a compound amount of Php45,000 at a nominal rate of 9%. Assume that the loan will be compounded every 6 months. What is the time of the loan? O 8.68 years O 7.70 years O 9.21 years O 10 years

A loan of Php20,000 is expected to yield a compound amount of Php45,000 at a nominal rate of 9%. Assume that the loan will be compounded every 6 months. What is the time of the loan? O 8.68 years O 7.70 years O 9.21 years O 10 years

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 19E

See similar textbooks

Related questions

Q: ABC is inclined to take a bank loan that has a face amount of P5,000,000, a term of 6 months, intere...

A: Generally, The loan is paid out off several Installments. Based on the credit history of borrower, B...

Q: the annual interest rate on a credit card is 12.99%. If a payment of $300.00 is made each month ,how...

A: Unpaid balance (PV) = $2446.16 Interest rate = 12.99% Monthly interest rate (r) = 12.99%/12 = 1.0825...

Q: Determine the present worth if the bond pays 12% compounded annually?

A: The present worth can be found using the PV Function in excel. PV = (RATE, NPER, -PMT, -FV, 0) RATE ...

Q: Captain Fernandez has just taken retirement from the army at the age of 40. Being a middle age perso...

Q: CONFIDENTIAL 5 BA/FEB2022/FIN435 SECTION B (TRUE/FALSE) 1. Financial markets include the capital mar...

A: (Note: We’ll answer question 7 since the exact one wasn’t specified. Please submit a new question sp...

Q: a river. The estimated cost and benefits are listed below. (i) If a 6% per year rate applies and dam...

A: Modified Benefit/Ratio: It is an indicator of profitability applied in the analysis of cost benefits...

Q: e of the investment, knowing that inflation is 3% cumulative annually and that the required profitab...

A: The internal rate of return (IRR) is a financial metric for determining the profitability of potenti...

Q: Suppose the current USD/euro exchange rate is 1.2000 dollars per euro. The six-month forward exchang...

A: Exchange rate (ER) is a value at which two different currencies are exchanged or traded. To estimate...

Q: For minimum variance portfolio,the weight of Asset A1 Ltd in two asset portfolio ,having correlation...

Q: ally purchase a discount bond today for a price of $3333. the bond promises a cash flow of $5550 in ...

A: Price of bond = 3333 Future Value of bond = 5550 N = 5 Interest rate = 6%

Q: under what circumstances would it be appropriate for a firm to use different costs of capital for it...

A: Cost of Capital: It refers to the cost of raising capital from the investors for a business. For the...

Q: A Treasury bond maturing on December 15, 2020 is yielding 3.45% and is priced at $1,124.36. What is ...

A: Bond price = $1124.36 F = Face value = $1000 r = 3.45% Let C = Coupon n = 5 years

Q: Dave put $22,000 in an investment that is compounded yearly at a rate of 7%. The investment is over ...

A: Future Value refers to the value of the current asset or investment or of cash flows at a specified...

Q: The corporation has current assets of P5 million, current liabilities of P5 million, net fixed asset...

A: Current ratio is an important liquidity ratio that measures the ability of the business to meet its ...

Q: Assume a Japanese firm is going to receive an amount of exports sales in U.S. dollars. Assume that t...

A: The amount is to be received in US $ Then the amount is to be converted into Japanese Yen. If the US...

Q: If you buy a computer directly from the manufacturer for $2,546 and agree to repay it in 48 equal in...

A: Here we will have to find the amount of monthly installments and the total interest paid. Note that ...

Q: A) Calculate the total intial outlay of the project. B) Determine the annual cash flow for the proje...

A: Total Initial Outlay: It refers to the initial investment required to begin a project. These include...

Q: Kolomela (Sisheni South) represented a major expansion mining project for Kumba. Kumba is considerin...

A: Sales revenue in 1st year = K20 Billion Sales revenue in 2nd year = K30 Billion Sales revenue in 3...

Q: n supposedly not the most important goal of

A: Step 1 Profit cannot tell us the financial strength of a company. If maximizing profits is the compa...

Q: A lender requires PMI that is 0.8% of the loan amount of $490,000. How much (in dollars) will this a...

A: A loan's PMI or Private mortgage insurance is a kind of mortgage insurance that is used by lenders w...

Q: Which of the following statements is false? A) In bankruptcy, management is given the opportunity t...

Q: a. Calculate Big Door's WACC. (Round your answer to 2 decimal places.) WACC b. Calculate Big Door's ...

A: WACC: Weighted Average Cost of Capital represents the firm's total cost of capital. It is computed b...

Q: Consider the following income statement and other information: Luther Corporation Consolidated ...

A: Earnings per share = Net income/Number of shares outstanding

Q: Suppose that a young couple has just had their first baby and they wish to insure that enough money ...

Q: You own 100 shares of a "C" Corporation. The corporation earns $5.00 per share before taxes. Once ...

A: Number of shares owned = 100 Earning per share before tax = 5 Corporate tax rate = 40% Personal tax ...

Q: The bid rate of bank A on Euro currency is $0.45, and the ask rate of the currency is $0.47. The bid...

A: The bid ask spread percentage is calculated as bid ask spread divided by bid rate

Q: 51 Which type of budget requires a facility manager to perform an in-depth analysis of all line item...

A: Budget means estimation of income and expenditure for the upcoming period. Budgets are used for perf...

Q: 1- For the following cash flow diagram, Find the capital recovery cost "CR(i)" with an interest rate...

A: The capital recovery concept is generally is generally used by firms before they make any substantia...

Q: dyne heed to buy a refrig and they will need to borrow money in rate). If the refrigerator at Sears ...

A: In the add on method we need to calculate the interest for the given period and than we need to calc...

Q: QRW Corp. needs to replace an old machine with a new, more efficient model. The new machine being c...

A: A capital budgeting project is a long-term project undertaken by the company and involves some addit...

Q: a. What is the outstanding balance? b. Suppose you cannot make the mortgage payment and you are i...

A: Present Value of Annuity: It represents the present worth of the future annuity payments and is comp...

Q: Solve for the compound amount and compound interest earned if $ 825 is invested for 10 years at 4% c...

A: The future value is the amount that will be received at the end of a certain period. The future valu...

Q: What does HPR stand for? O a. Holding Period Return O b. House Price Return O C. Holding Power Retur...

A: Abbreviation is a shorter form of words or phrase. The shorter form of word is used instead of whole...

Q: If you are able to save $5000 in year 1, $5150 in year 2, and amounts increasing by 3% each year thr...

A: Data given: A1 = $5000 g= 3% i= 10% n= 20 years

Q: Suppose you invest $25500 for 12 years paying 2.25% annual interest. How much will you have at the e...

A: The future value is the amount that will be received at the end of a certain period. The future valu...

Q: 12

A: The annual equivalent cost is parameter for determining the feasibility analysis of the projects.

Q: November 2009, Perrigo Co. (PRGO) had a share price of $39.20. They had 91.33 million shares outsta...

A: Earnings per share = Net income/Number of shares outstanding

Q: wealthy man wants to provide annual scholarships to deserving students. The fund will grant P100,000...

A: The present value of money is required to get the amount of scholarship required and must according ...

Q: An annuity-immediate has 3 annual payments of $200, followed by a perpetuity of $300 starting in the...

Q: APPLY THE CONCEPTS: Net present value and Present value index Sutherland Engineering is looking to i...

Q: Bill O'Brien would like to take his wife, Mary, on a trip three years from now to Europe to celebrat...

A: Compound interest is that type of interest which is charged on principal as well as on the interest ...

Q: sit, Find the present value of all investments. H

A: Present Value: It is the present worth of future annuity payments being periodic in nature. It is co...

Q: If the income level in Mexico increases exponentially with stagnant growth in the U.S. income level ...

A: When the income level country increases , the purchasing power of the country rises, this leads to m...

Q: If money is worth 12% compounded monthly, determine the present value of the following: a. An ann...

A: Annual payment (P) = 10000 Interest rate = 12% Monthly interest rate (r) = 12%/12 = 1%

Q: Cascade Mining Company expects its earnings and dividends to increase by 7 per-cent per year over th...

A: To determine the present value of the stock, we need to discount back the future cash flows (dividen...

Q: Quantum Corporation has two different bonds currently outstanding. Bond M has a face value of K20,00...

A: Face Value of M bond = K20,000 Time period of M bond = 20 years Semi-annual Payments = K800 for 8 ye...

Q: If Canada's inflation is higher than the U.S., the Canadian exports to the U.S. should ____, its imp...

A: Inflation refers to the rise in price of goods and commodities in the country.

Q: Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest ...

A: When a certain amount is deposited at a certain interest with compounding, the accumulated amount is...

Q: Canliss Mining Company borrowed money from a local bank. The note the company signed requires five a...

A: Present value of annuity is the current value of the future payments that are calculated using the i...

Q: You want to endow a scholarship that will pay $7,000 per year forever, starting one year from now. I...

A: Annual payment (P) = $7000 Discount rate (r) = 5%

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 loan of Php20,000 is expected to yield a compound amount of Php45,000 at a
nominal rate of 9%. Assume that the loan will be compounded every 6 months.
What is the time of the loan?
O 8.68 years
O 7.70 years
O 9.21 years
O 10 years

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

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?
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
A loan of Php 50,000 due 5 years from now and Php 50,000 due 10 years from now is to be repaid by a payment of Php 20,000 in 2 years, a payment of Php 40,000 in 4 years and a final payment at the end of 7 years. If the interest rate is 5% compounded annually, how much is the final payment?
You get a twenty-year amortized loan of Php100,000 with a 5% annual interest rate. What are the annual payments? a. Php 8,718 B. Php37,689 C. Php 4,762 d.Php 8,024
A loan is to be paid by an amount of Php 75,000 at the end of 5 years and 6 months. Calculate the amount of the loan if interest rate is 6% compounded continuously. engineering econ
Assume you borrow Php10,000 today and promise to repay the loan in two payments, one in year 2 and the other in year 4, with the one in year 4 being only half as large as the one in year 2. At an interest rate of 10% per year, the size of the payment in year 4 is closest to:
. You get a 25-year loan of Php150,000 with a 8% annual interest rate. What are the annual payments? Php14,052 Php 2,052 Php13,965 D. Php13,427
A loan for P 50,000 is to be paid in 3 years at the amount of P65,000. What is the effective rate of money?
A business loan of PhP 650,000 is to be settled by paying PhP 29,994.20 monthly in 2 years. If the interest rate is 10% converted monthly, how much is the outstanding balance after 6 payments?
An ARM for $100,000 is made at a time when the expected start rate is 5 percent. The loan will be made with a teaser rate of 2 percent for the first year, after which the rate will be reset. The loan is fully amortizing, has a maturity of 25 years, and payments will be made monthly.a. What will be the payments during the first year?b. Assuming that the reset rate is 6 percent at the beginning of year (BOY) 2, what will payments be?c. By what percentage will monthly payments increase?d. What if the reset date is three years after loan origination and the reset rate is 6 percent, what will loan payments be beginning in year 4 through year 25?
A cash loan is to be reapid by paying 13,500 php quarterly for 3 years starting the ened of 4 years. If interest rate is 12%convertible quarterly , how much is the cash loan?
An ARM for $100,000 is made at a time when the expected start rate is 5 percent. The loan will be made with a teaser rate of 2 percent for the first year, after which the rate will be reset. The loan is fully amortizing, has a maturity of 25 years, and payments will be made monthly. Required:a. What will be the payments during the first year?b. Assuming that the reset rate is 6 percent at the beginning of year (BOY) 2, what will the payments be?c. By what percentage will the monthly payments increase?d. If the reset date is three years after loan origination and the reset rate is 6 percent, what will the loan payments be beginning in year 4 through year 25