a. If you take the first option, $7,000 per month for two years, what is the present value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value of the second option? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Q: As an engineer, you plan to put aside 20% of your yearly income. You expect to make Php1 million in…

A: Save 20% of Yearly Income Income in first year = 1,000,000 Savings in first year = 20% * 1,000,000 =…

Q: Billy has 44,000 dollars to invest in a stock market. He wants to be advised on this matter, by a…

A: Effective annual interest rate(EAR) can be calculated by using this equation EAR =1+imm -1 where…

Q: You earn $500 a week at your new job and would like to invest 20% of your income into an account…

A: Here, Weekly Income is $500 Investment is 20% of Income. Hence, investment will be:…

Q: Your first job out of college will pay you $81,000 in year 1 (exactly one year from today). You…

A: C1 =  $81,000 in year 1Salary growth rate, g = 7% per yearC2 = C1 x (1 + g)C3 = C2 x (1 + g) = C1 x…

Q: You have invested your annual bonus in a one year fixed deposit at Alpha Bank which offers a nominal…

A: The effective annual rate of return is the return that an investor actually gets for their…

Q: You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a…

A: Using excel PMT & FV Function

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A: The present value of future cash flows is calculated by discounting them. Monthly payments received…

Q: You have just purchased a new warehouse. To finance the purchase, you have arranged for a 30-year…

A: The calculation is:

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A: According to the time value rule, dollar money available today is worth more than the same dollar…

Q: When you start your career, you decide to set aside $600 every month to deposit into an investment…

A: GIVEN, R=11% A=$600 N=25 M = 12 (MONTHLY COMPOUNDING)

Q: You are planning to save for retirement over the next 35 years. To do this, you will invest $770 per…

A: Amount in stock account after 35 years: Monthly deposits=$770 Number of years=35 Rate of…

Q: Peter Lynchpin wants to sell you an investment contract that pays equal $13,500 amounts at the end…

A: Value we pay today is present value of cashflows

Q: Carl Hightop, a popular basketball player, has been offered a four-year salary deal. He can either…

A: Option-A - Lump sum Lump sum payment = $4,800,000   Option-B - Quarterly payments   Quarterly…

Q: How many years will it take to reach your goal?

A: Year Opening Balance ($) Interest % Interest Amount ($) Additional Deposit ($) Balance at year end…

Q: How much would you be willing to pay for this investment if you required a 12 percent rate of…

A: Present Value of Annuity: It represents the present worth of the future annuity stream of cash…

Q: As an engineer, you plan to put aside 20% of your yearly income. You expect to make Php1 million in…

A: Savings = 20% of yearly Income N = 6 First year income = 1,000,000 Savings = 20%*1,000,000 Savings =…

Q: You are an employee that earns 20,000 per month. Assuming that you want to invest half of the amount…

A: The given problem can be solved using FV function in excel. FV function computes accumulated amount…

Q: You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two…

A: The question is based on the concept of Financial Management.

Q: You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 30-year…

A: Annual Percentage Rate (APR) refers to the percentage rate which shows the interest rate…

Q: Mitchell Investments has offered you the following investment opportunity: $7,000 at the end of…

A: Here, $7,000 at the end of each year for the first 7 years, plus $5,000 at the end of each year from…

Q: How much would you be willing to pay for this investment if you required a 8 percent rate of return?…

A: Value of an investment is the discounted value of cash flows, at the rate of required rate of…

Q: You are planning to save for retirement over the next 25 years. To do this, you will invest $7,000 a…

A: The future value of an annuity is the future worth of a cash flow series at a particular time period…

Q: You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a…

A: Using excel FV and PMT function

Q: You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two…

A: A series of payment made at equal interval is called Annuity.

Q: You expect to receive $150,000 per year on a contract that will last 5 years. You are trying to…

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Q: You just joined the investment banking firm of Dewey Cheatham and Howe. They’ve offered you two…

A: Calculate the present value of both salary arrangements, prefer the one with higher present value.

Q: You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two…

A: The current worth of the cash flows or an asset after discounting is termed as the present value.

Q: Your firm has a retirement plan that matches all employee contributions with employer contributions…

A: The value of current payment or upcoming flow of payments at any future date when flow of payment…

Q: You are planning to save for retirement over the next 15 years. To do this, you will invest $1,100 a…

A: Calculation of monthly withdrawal amount: Answer: Monthly withdrawal amount is $3113.04

Q: You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two…

A: Here the given rate is APR and as it is compounded monthly we need to find the EAR. EAR =…

Q: You are planning to save for retirement over the next 35 years. To do this, you will inves $870 per…

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Q: If you borrow $30,000 from your dad for college and you agree to pay him back at 14% interest per…

A: GIVEN, LOAN (P)= $30,000 RATE(R) =14% MONTHLY INSTALLMENT(A)= $750 FREQUENCY OF COMPOUNDING (M) =12

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A: The Total Net Assets: The total net assets are usually defined as the net of total assets (current…

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A: Inflation free interest rate is that rate which has been adjusted for inflation. It is calculated…

Q: You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two…

A: Given, Interest rate = 9% per annum compounded monthly = 0.75% per month   Option 1 = 66000 each…

Q: You are planning to save for retirement over the next 25 years. To do this, you will invest $760 per…

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Q: Your group receives a phone proposal to invest in a new business. Thecaller informs you that it will…

A: The question gives the following information:

Q: Suppose that you earn $45,600 per year. What is your monthly salary? Assume that you deposit 10% of…

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Q: You are planning to retire in 25 years time. Immediately after your retirement, you wish to go for a…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

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Q: You want to invest in a new small business venture. If you invest $10,000, you have a guaranteed…

A: Cash Outflow at Year 0 = $10,000 Cash Outflow at Year 1 = $850 Cash Outflow at Year 2 = $1,200 Cash…

Q: Suppose you are considering taking consumer loan from bank for one year. Usually, for short-term…

A: Given: