Mr. Cruz wanted to buy a house and lot worth P5M ten years from now so he decided to invest his money. How much should Mr. Cruz invest if it will earn an interest of 8% compounded monthly during the first 3 years, compounded quarterly for the next 4 years and compounded annually during the last 3 years? Create a cash flow diagram and show a complete solution.

Mr. Cruz wanted to buy a house and lot worth P5M ten years from now so he decided to invest his money. How much should Mr. Cruz invest if it will earn an interest of 8% compounded monthly during the first 3 years, compounded quarterly for the next 4 years and compounded annually during the last 3 years? Create a cash flow diagram and show a complete solution.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 34P

See similar textbooks

Similar questions

Bouvier Restaurant is considering an investment in a grill that costs $140,000, and will produce annual net cash flows of $21,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether Bouvier should invest in the grill.
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
Mr.Andi is a manager at an automation company. As part of his future planning, Mr.Andi plan to manage an investment IDR 100 thousand in the first year and increase this amount is 10% annually. To solve this problem, you have to create a spreadsheet from the data provided to complete your calculations along with the cash flow. Based on the data given: (a) How long will Mr.Andi's account have value in the future of IDR 3,000,000 at a rate of return of 6% per annum? (b) If Mr.Andi counts up to the next 30 years, find the nominal amount in the next 10, 20, and 30 years that Mr. Andi will achieve. The calculation spreadsheet can describe the amount deposited annually.
1. Man wishes his son to receive 200,000 in 10 years from now. What amount should he invest if it will earn invest of 10% compounded annually during the 1st 5 years, and 12% compounded quarterly during the next 5 years? Draw the Cash Flow Diagram
Zee bought the newest television for Php 500,000. He gave a down payment of Php 75,000 in order to receive the item. He also paid Php 100,000 after 1 year and Php 150,000 3 years after receiving the item. How much would he need to pay on the 5th year to completely pay off the item if interest is compounded at 12% per year? Show the cash flow diagram and use equation of values to solve for the requirement with year 4 as the focal date.
A friend tells you she has saved for 10 years and has a present sum of $20,000, which earned at the rate of 10% per year. Determine the equivalent amount she had to start with 10 years ago? Draw a cash flow diagram and do a manual solution.
An electrical engineer wants to deposit an amount P now such that she can withdraw an equal annual amount of A1 = $3000 per year for the first 5 years, starting 1 year after the deposit, and a different annual withdrawal of A2 = $4000 per year for the following 3 years. How would the cash flow diagram appear if i = 9% per year?
You bought the newest gaming laptop for ₱500,000. You gave a downpayment of ₱75,000 in order to receive the item. You paid ₱100,000 after 1 year and ₱150,000 3 years after receiving the item. How much would you need to pay on the 5th year to completely pay off the item if interest is compounded at 12% per year? Show the cash flow diagram and use equation of values to solve for the requirement with year 4 as the focal date.
A man borrowed Php 120,000 and promised to pay annually for 5 years. The payment starts at "X" pesos. The man intends to increase his payments by Php 5,000 at the end of each successive year. If the interest rate is 8% compounded annually, how much will the first payment be? If the man decides to pay annually with 8 equal payments with the first payment to be made after 4 years, what will be the amount of the annual payment? Construct the cash flow diagram for both cases.
A man wishes his son to receive P200, 000 ten years from now. What amount should he invest if it will earn interest of 10% compounded annually during the first 5 years and 12% compounded quarterly during the next 5 years? Provide the cash flows and diagram.
What amount of money invested today at 15 % interest can provide the following scholoarships: Php 30,000 at the end of each year for 6 years, Php 40,000 for the next 6 years and Php50, 000 thereafter? What would be the formula for this question and the cashflow diagram?
Suppose you inherited Php275,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years? SHOW MANUAL SOLVING