View PoliciesCurrent Attempt in ProgressWhich of the following statements is true?O The higher the discount rate, the higher the present value.O The process of accumulating interest on interest is referred to as discounting.O If money is worth 10% compounded annually, $ 2420 due one year from today is equivalent to $ 2200 today.O If a single sum is due on December 31, 2020, the present value of that sum decreases as the date draws closer to December31, 2020.Save for LaterAttempts: 0 of 1 usedSubmit Answer

Compound Interest = Principal Amount*(1 + r)n Given, Interest 10% Compounded annually. Principal =…

Answered: Current Attempt in Progress Which of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

(a) Calculate the perpetual equivalent annual worth in future dollars for years 1 through ∞ for income of $50,000 now and $5000 per year thereafter. Assume the market interest rate is 8% per year and inflation averages 4% per year. All amounts are quoted as future dollars. (b) If the amounts had been quoted in CV dollars, what is the annual worth in future dollars?
The following cash-flow streams need to be analyzed: END OF YEAR CASH-FLOW STREAM $1 $2 $3 $4 5 W 100 200 200 300 1,$300 X 600 – – – – Y – – – – 11,200 Z $200 – $500 – 0,300 a. Calculate the future (terminal) value of each stream at the end of year 5 with a compound annual interest rate of 10 percent. b. Compute the present value of each stream if the discount rate is 14 percent.
Consider the following cash flows: Year Cash Flow 2 $ 22,900 3 40,900 5 58,900 Assume an interest rate of 9.7 percent per year. a. If today is Year 0, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If today is Year 0, what is the future value of the cash flows ten years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Present discounted values (I): Compute the present discounted value of thefollowing income streams. Assume the interest rate is 3%.(a) $50,000, received 1 year from now.(b) $50,000, received 10 years from now.(c) $100 every year, forever, starting immediately.(d) $100 every year, forever, starting 1 year from now.(e) $100 every year for the next 50 years, starting immediately.
1. Determine the present value of $1,500 to be received at the end of 10 years if the compound rate of interest is 9 percent.a. $710.25b. $583.12c. $633.62d. $674.002. Determine the present value of the following cashflows if the assumed discount rate is 14 percent. Year 1: $1000; Year 2: -$500; Year 3: $2000 and Year 4: -$600.a. $1,710.15b. $1,487.15c. $1,601.85d. $2,197.653.Determine the present value of the following cashflows if the assumed discount rate is 9 percent. Year 1: $1000; Year 2: -$1500; Year 3: $2000 and Year 4: -$1000.a. $1,600.25b. $1,800.15c. $1,715.60d. $1,450.704. Determine the price of a $1000 face value zero coupon bond with a YTM of 14 percent and 20 years until maturity if it compounded annually.a. $67.78b. $112.67c. $89.08d. $72.765. Determine the rate of return on a $10,000 investment that generated cashflows of $1,740.64 per year for 8 years.a. 8 percentb. 7 percentc. 10 percentd. 12 percent
8. If the concern is for the value that existing money will have next year, the formula for the intertemporal value of money can be expressed as follows: Next Year's Value = Present Value (1 + r). For example, if the interest rate is 10% and the present value is $100, the $100 will increase to $110 at the end of a year. a. Using this algebraic expression, show the formula for the present value of future income and calculate what $200 received next year is worth now. b. What is the present value of $100 received 2 years from now?
Using the future values tables, solve the following: Us ing the future values tables, solve the following: What is the future value on December 31, Year 10, of 10 cash flows of $20,000 with the first cash payment made on December 31, Year 1, and interest at 10% being compounded annually?
"Assume that the interest rate is 8.5% per year and you expect to receive the following stream of annual cash flows (The year 0 cash flow occurs today and the year 4 cash flow occurs exactly 4 years from today): (Year 0: $15,100); (Year 1: $21,100); (Year 2: $12,700): (Year 3: $19,250): (Year 4: $9,550); What is the current Present Value (PVO) of the stream of cash flows?" a)"$68,013- b)"$67,297" c)"$77,700 d)"$62,025" e)$64,399 f)$68,643"
How much would you be willing to pay today for an investment that would return P1,250 each year for the next 10 years, assuming a discount rate of 12 percent? A. P4,062.75B. P5,062.75C. P6,062.75D. P7,062.75E. None of the above
What would you be ready to spend now for a P1,250 annual return over the following ten years, assuming a discount rate of 12%?A. P4,062.75B. P5,062.75C. P6,062.75D. P7,062.75E. None of the above.
Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax rate of return is 1.711.71%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax monetary return is $855855. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.711.71% and an inflation rate of 1.391.39%, the after-tax real rate…
Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax rate of return is 1.711.71%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax monetary return is $855855. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.711.71% and an inflation rate of 1.391.39%, the after-tax real rate…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS