A trust fund amounting to ₱6700000 earns 7.4% annual interest. If ₱150,000 is to be withdrawn at the end of each year in the first 5 years, what is the maximum amount that can be withdrawn annually at the end of each year from the 6th year onward to make the fund last forever?

A trust fund amounting to ₱6700000 earns 7.4% annual interest. If ₱150,000 is to be withdrawn at the end of each year in the first 5 years, what is the maximum amount that can be withdrawn annually at the end of each year from the 6th year onward to make the fund last forever?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 20P

See similar textbooks

Related questions

Q: An summary of how you would allocate people and money to the WBS's operations should be provided.

A: Work breakdown structure is referred as the description of the work, which used done regarding the…

Q: what should be the cost of a 3 month put with a strike of 25.6? Please use 5 decimal places in your…

A: Put-Call Parity: It states that holding a long call and shorting a put of the same security will…

Q: Describe the three elements of a persuasive appeal, and give two examples of each element that…

A: The ability to persuade you to do or believe something: His wrath can detract from the…

Q: TABLE 4 You are considering a new product launch: Equipment for the project will cost $875,000 The…

A: Net present value is the difference between Present Value of cash Inflows and Initial Investment. A…

Q: Which of the following is not true Large Value Transfer System is an electronic, real time net…

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: LO3 Explain how to set a bid price for a project. LO4 Evaluate the equivalent annual cost of a…

A: The quoted price of a project is known as the bid price. It is decided by the management on the…

Q: What are the different cases or instances under the New Civil Code when the debtor shall lose every…

A: A debtor, also known as a debitor, is a legal entity that owes a debt to another. An individual, a…

Q: stment of 100,000 is to be used to make payments of 4,000 at the end of each quarter for as long as…

A: The payments are made periodically that carry the payment of principal amount and payment of…

Q: Cool Runnings Corp. plans to construct a building after 5 years. The Chief Financial Officer…

A: We need to use present value formula to calculate the amount of cash need to invested today. Present…

Q: You expect to receive the following: $4,448 $22,900 $3,813 $843 $10,528 at the end of each year for…

A: Given: Year Particulars Amount 12 Annuity $4,448 0 Current value $22,900 6 Future value…

Q: The answer is somewhat close. The right answer is 1.5337 Please clarify

A: Stock price is $50 Strike price is $52 Risk free rate is 1% Time period is 3 months To Find: Value…

Q: Cooper Industries is considering a project that would require an initial investment of P235,000. The…

A: Solution:- Internal Rate of Return (IRR) is the rate of return which the project is yielding. At…

Q: According to the housing recommendations from this book of the family has a gross annual income of…

A: Given, Meaning of mortgage loan:- It is that type of a loan which is secured and which helps to get…

Q: Sydney limited draws a promissory note with a face value of $50 000 and a maturity of 181 days. The…

A: Interest rate can be calculated as: = Discount amount / Present value * 365/ Days to maturity * 100

Q: What is the unpaid balance after 4 years?

A: The unpaid balance is the remaining principal amount after 4 years. It is the amount remaining to be…

Q: he college tuition is expected to increase with an average of 5% per year for the next 5 years. The…

A: We will use the concept of time value of money here. As per the concept of time value of money the…

Q: D3) What is the fundamental difference between a solution strategy to determine efficient…

A: A portfolio is a collection of financial investments such as stocks, bonds, commodities, cash and…

Q: Current assets is PHP2,000, current liabilities is PHP3,500. What is current ratio? Inventory is…

A: Note: As per Bartleby guidelines,If a question with multiple sub-parts are posted, first 3…

Q: Capital Budgeting: Natural Organics Products, a company with profitable ongoing operations, is…

A: NPV NPV is a capital budgeting tool to decide on whether the capital project should be accepted or…

Q: A couple buys a $150000 home, making a down payment of 23%. The couple finances the purchase with a…

A: A mortgage is a sum of money acquired from outside sources such as banks for a defined length of…

Q: What is the approximate net present value of a machine that will save you $13,310 in each of the…

A: Formula Net present value = P*[1-(1+i)-N]/R Where P - Annual saving i.e. $13,310 i - Interest rate…

Q: In the DuPont system, the return on total assets (asset) is equal to (return on equity) ×…

A: The return on total assets formula is provided below: Return on Total Assets = Net Profit / Total…

Q: 15 Maturity (ynars Price (per $100 tace value) $77 12 396 03 $91 61 S06 99 $82 17 a. Compute the…

A: Yield to maturity is the rate of return that is earned by the bond when bonds already make all the…

Q: Find the total proceeds (in $) from the sale of 20 bonds with a coupon rate of 8.75 and a current…

A: Bond: It is is an obligation security that is sold by huge business firms and government bodies to…

Q: Frontyard Inc has a beta of 0.9. The risk-free rate is 2.5% and the market risk premium is equal to…

A: As per the guidelines, in case of multi part questions, only first three are required to be solved.…

Q: According to your analysis, stock ABC is overvalued. What is the best course of action?

A: Stock Overvalued: A stock is said to be overvalued when its current market price is greater than…

Q: how much must you donate now if the fund earns interest at a rate of 4% per year? Show your hand…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: sales increase from P80,000 per year to P140,000 per year, and if the operating leverage factor is…

A: Percentage increase in net operating income= Percentage increase in sales ×operating leverage…

Q: If a disease is shown to have a surprisingly high prevalence elasticity of demand for…

A: An elasticity of demand is defined as the sensitive demand for better, which is compared for the…

Q: Question 3 The table below provides the end-of-year share prices (in GB pence) for Centrica plc and…

A: Risk, - types and measures: Risk refers to the possibility that the actual returns on security are…

Q: The carreacy bank hold in their vaults plus their deposits at the Federal Reserve. A Bank Reseves…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Jonathan invested a total of Php 20,000.00 in two simple interest savings accounts, one having an…

A: We need to use simple interest formula to calculate principal value at each rate. Simple interest…

Q: On September 27, 2015, Koala, Inc. issued a 10 year bond (with a typical $1,000 face value) that had…

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: Investor Matt has $152,000 to invest in bonds. Bond A yields an average of 9.2% and the bond B…

A: A bond is a debt instrument used to raise capital for various projects. It can be traded on the…

Q: A$180,000 mortgage amortized by monthly payments over 20 years is renewable after five years (a) If…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Your company has earnings per share of $3. It has 1 million shares outstanding, each of which has a…

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: Big Rock Brewery currently rents a bottling machine for $52,000 per year, including all maintenance…

A: Net Present Value: It is net off values of the current worth of money inflows and outflows…

Q: A donor of the University of Alberta wants to establish a scholarship that pays out each year…

A: The inflation rate reduces the purchase ability of nominal money because it results for rise in…

Q: Elegant Home Company operates a number of home improvement stores in a metropolitan area. Elegant…

A: Before investing in new projects, profitability of the project is evaluated by using various methods…

Q: A debt of $4,000.00 is to be paid off with 8 equal semi-annual payments. If the interest rate is 15%…

A: Repaying debt in equal instalments is a type of annuity. That is any number of payments of equal…

Q: Year 1 180,000 200,000 300,000 240,000 230,000 210,000 330,000 260,000 195,000 155,000 The company…

A: “Since you have asked to solve part D, E and F only, we will solve the same parts for you.” Capital…

Q: Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 6%. The…

A: Formulas: Expected return on A = risk free rate + Beta on M1 x risk premium f1 + Beta on M2 x risk…

Q: Consider an economy with just two assets. The details of these are given below. Number of Shares…

A: Number of shares of A = 100 Number of shares of B = 150 Price of A = 1.5 Price of B = 2 The expected…

Q: Which of the following is incorrect regarding for-profit corporations? Multiple Choice Most business…

A: Corporations are the entity created by laws. Corporation can be two types, one is formed for profit…

Q: Find 1. Total Debt Ratio 2. Debt to Equity Ratio 3. Net profit Margin

A: The financial ratios are used to find out the financial health of the company.

Q: By iset (BBS) is considering the purchase of two new hot air balloons so that it can expand its…

A: Answer - Part 1 - Calculation of Accounting rate of Return- Particular Amount Intial…

Q: What roles, if any, do an investor's personal characteristics play in determining portfolio policy?

A: An investor is a person or any organization who contributes the money in investments such as debt,…

Q: d help with this multiple st

A: Option is in the money only when exercise price is less than current market price.

Q: Calculate the purchase price of the $1000 face value bond using the information given below. (Do not…

A: Bond price is discounted value of cash inflows using the market interest rate from investments in a…

Q: A 9-year annuity has a series of payments 1, 2, 3, 4, 5, 4, 3, 2, 1, with the first payment made at…

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

Question

100%

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

Given Information:

VIEW

Calculations are as follow:-

VIEW

Step by step

Solved in 2 steps with 2 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

If 90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of 23,138.32 are made starting on December 31, 2020, that will deplete the fund, what is the interest rate being earned if interest is compounded annually?
Amount of an Annuity John Goodheart wishes to provide for 6 annual withdrawals of 3,000 each beginning January 1, 2029. He wishes to make 10 annual deposits beginning January 1, 2019, with the last deposit to be made on January 1, 2028. Required: If the fund earns interest compounded annually at 10%, how much is each of the 10 deposits?
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?
a) An individual wishes to accumulate $1,700,000 in 20 years. If he wants to deposit a certain amount of fund annually in the first 10 years and do nothing in the following 10 years, what size deposit is required to meet the stated objective? Assume the annual compound interest rate is 4%. b) Solve the following, using interest rate at 7% compounded annually: i) What is the amount that will be accumulated in a sinking fund at the end of the 15th year if $200 is deposited in the fund at the beginning of each of the 15 years? ii) What uniform annual payment for 30 years is equivalent to spending $10,000 immediately, $11,000 at the end of 10 years, $12,000 at the end of 20 years, and $2,000 a year for 30 years?
. How much must be deposited in a fund at the end of each six months for 12 years to raise P25,000 by the end of that time, if money is worth 5% compounded semiannually? Make out the first six lines of the sinking
If P20,000 is invested in a fund that pays 10% compounded annually, how much money will be in the fund after 3 years? Accumulate P30,000 for 3 years and 6 months at 16% compounded semiannually. What is the compound amount after you invest P22,350 for 5 years and 6 months at 5% compounded semiannually? What is the (a) present value and (b) compound interest earned for 3 years and 9 months of P84,500 that is compounded quarterly at 20% interest? Find the nominal rate which when compounded semiannually and applied to a P50,000 principal will earn an interest of P5,000 after 60 months. In how many months will P10,000 earn a compound interest of P2,000 if money is worth 12% compounded monthly? What effective rate is the equivalent to 15% compounded annually?
Two years from now. My Orly needs P32,000 to liquidate a certain debt. If money is worth 5% compounded quarterly. a) How much must he deposit at the end of each quarter to provide for the payment of the debt? b) Form a sinking fund table showing the growth of the fund for two years.
An individual wishes to accumulate $1,700,000 in 20 years. If he wants to deposit a certain amount of fund annually in the first 10 years and do nothing in the following 10 years, what size deposit is required to meet the stated objective? Assume the annual compound interest rate is 4%.
The PUR Foundation deposits $2,500,000 today in a fund earning 6% APR compounded monthly. What will be the value of this deposit 10 years later?
$150,000 is deposited in a fund that pays 5% annual compound interest for 2 years, 3% annual compound interest for 2 years, and 4% annual compound interest for 2 years. If uniform annual withdrawals occur over the 6-year period, what will be the magnitude of the annual withdrawals? a. $27,689.63b. $28,614.29 c. $28,804.50 d. $29,552.62
Mark deposit $1,000,000 in a fund today, the conditions for payment to Mark are a fixed amount for 10 years, starting 10 years from today and additionally $5,000 for 5 more years. There is an annual interest rate of 5% per annum in which the fund accumulates and each payment is made at the end of the year. What is the fixed amount?
Eight equal deposits of $1,000 are made at the end of each year into a fund paying 8%. a. What is the present worth, 1 year before the first deposit? b. What is the future worth, immediately after the last deposit? c. What is the future worth, 3 years after the last deposit?