How much money must the company set aside now in an account that earns interest at a rate of 14% per year, compounded quarterly, to the nearest dollar? What is the annual effective rate?
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- An investment broker that Ava trusts recommended that she purchase a $50,0 00, 15-year municipal bond that generates a dividend of 4% per year payable quarterly. She will pay a discounted amount of $45,000 now for the bond. In general, Ava hopes to make 8 % per year compounded quarterly on her investments. Using the PW value, determine if this is a financially advantageous investment for her. Solve with factors. The present worth isAloma, a university graduate who started a successful business, wants to start an endowment in her name that will provide scholarships to IE students. She wants the scholarship to provide $10,000 per year and expects the first one to be awarded on the day she fulfills the endowment obligation. If Aloma plans to donate $100,000, what rate of return must the university realize in order to award the $10,000 per year scholarship forever?GoBulls Media is considering opening a new manufacturing facility to process and mail coupons to 660,000 households in the Tampa Bay area. The new facility will require an initial investment of $240,000 and an annual operating cost of $22,000. It will have a $86,500 salvage value after 5 years. Calculate the Effective annual interest rate of the MARR if the company's minimum attractive rate of return is 5% per year, compounded monthly.
- Army Research Laboratory scientists developed a diffusion-enhanced adhesion process which is expected to significantly improve the performance of multifunction hybrid composites. NASA engineers estimate that composites made using the new process will result in savings in space exploration projects. The cash flows for one project are estimated. Determine the rate of return per year. Year, t Cost ($1000) Savings ($1000) 0 −210 — 1 −150 — 2–5 — 100 + 60(t − 2)Q10. A mortgage bond issued by Automation Engineering is for sale for $9,000. The bond has a face value of $10,000 with a coupon rate of 9% per year, payable semi-annually. What rate of return will be realized if the purchaser holds the bond to maturity 7 years from now? The rate of return will be % per year.A company that utilizes carbon fiber 3-D printing wants to have money available 2 years from now to add new equipment. The company currently has $650,000 in a capital account and it plans to deposit $200,000 now and another $200,000 one year from now. The total amount available in 2 years, provided it returns a compounded rate of 15% per year, is closest to: (a) $1,354,100 (b) $1,324,100 (c) $1,125,125 (d ) $1,050,000
- A finance company advertises two investment plans. In Plan A, the company pays P10,500 after 12 years for every P10,000 now. In Plan B, for every P10,000, the company pays P60,000 at the end of the 10th year and P40,000 at the end of the 15th year. Choose the best plan if interest is 10% annually using Present Worth Analysis MethodA new permanent endowment at the University of Alabama will award scholarships to engineering students twice per year (end of June and end ofDecember). The first awards are to be made beginning 5-1⁄2 years after the $20 million lump sum donation is made. If the interest from the endowment is intended to fund 100 students each semester in the amount of $5000 twice per year, what semiannual rate of return must the endowment fund earn?A permanent endowment at a major university is established to award scholarships to engineering students. The scholarships will be awarded 11 years after the $19000000 lump-sum donation is made. If the interest from the endowment is to fund 100 students each year in the amount of $19000 each (for infinite years), what annual rate of return must the endowment fund earn?
- A Texas chemical company had to file for bankruptcy because of a nationwide phaseout of methyl tertiary butyl ether (MTBE). The company is in the planning phase of reorganizing and expects to invest $50 million in a new ethanol production facility. Determine the revenue necessary each month to recover its investment in 3 years, plus interest at a rate of 2% per month, compounded continuously. Solve by (a) formula, and (b) spreadsheet functionEncryptCo has two possible plans for accumulating money for capital projects. One plan is to save $100,000 per year, independent of growth. The second plan is to start with $80,000 per year and increase the annual contribution by 5% each year. The money will accumulate interest at 4% nominal annual, compounded quarterly. Which plan will have more money after 10 years?A $20,000 collateral bond has a coupon rate of 7% per year payable quarterly. The bond matures 30 years from now. At a market interest rate of 7% per year, compounded semiannually, the amount and frequency of the bond interest payments is: (a) $1400 per year (b) $1400 per quarter (c) $350 per year (d) $350 per quarter