(b) $4,120 every 3 months payable at the end of each quarter for 5 years. (Round factor values to 5 decimal places, e.g. 1.25124 andfinal answer to 0 decimal places, e.g. 458,581.)Present value$ Julia Baker died, leaving to her husband Morgan an insurance policy contract that provides that the beneficiary (Morgan) can chooseany one of the following four options. Money is worth 2.5% per quarter, compounded quarterly. Compute Present value if:Click here to view factor tables(a)Your answer is correct.(a) $56,290 immediate cash. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.)Present value $GA56290

Time value of money :— According to this concept, value of money in present day is greater than the…

Answered: Julia Baker died, leaving to her…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Julia Baker died, leaving to her husband Tony an insurance policy contract that provides that the beneficiary (Tony) can choose any one of the following four options. Money is worth 2.5% per quarter, compounded quarterly. Compute Present value if: $4,060 every 3 months for 3 years and $1,480 each quarter for the following 25 quarters, all payments payable at the end of each quarter. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
George and Yujia currently insure their cars with separate companies, paying $1,500 and $1,300 a year. If they insured both cars with the same company, they would save 15 percent on the annual premiums. What would be the future value of the annual savings over 10 years based on an annual interest rate of 5 percent? Use Exhibit 1B-2. (Round your final answer to 2 decimal places. Do not round intermediate calculations. Omit the "$" sign in your response.) Future value of annual savings $
A widow currently has a $84,000 investment that yields 6 percent annually. Can she withdraw $21,000 for the next five years? Use Appendix D to answer the question. Round your answer to the nearest dollar.The maximum amount that can be withdrawn is $ so she -Select-cancannotItem 2 withdraw $21,000 for the next five years.
Susan Orman wants to pay $1,400 semiannually to her granddaughter for 10 years for helping her around the house. If Susan can invest money at 6% compounded quarterly, how much must she invest today to meet this goal? (Please use the following provided Table.) (Do not round intermediate calculations. Round your answer to the nearest cent.)
Mark Harris must decide how to invest $20,000 that he just inherited. What would be the future value of his investment after 7 years under each of the following three investment opportunities? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)a. 6.48 percent compounded quarterly. Value of investment after 7 years $ b. 6.00 percent compounded monthly. Value of investment after 7 years $ c. 6.23 percent compounded continuously. Value of investment after 7 years $
Julia Baker died, leaving to her husband Brent an insurance policy contract that provides that the beneficiary (Brent) can choose any one of the following four options. a. $55,000 immediate cash. b. $4,000 every 3 months payable at the end of each quarter for 5 years. c. $18,000 immediate cash and $1,800 every 3 months for 10 years, payable at the beginning of each 3-month period. d. $4,000 every 3 months for 3 years and $1,500 each quarter for the following 25 quarters, all payments payable at the end of each quarter. Instructions If money is worth 2½% per quarter, compounded quarterly, which option would you recommend that Brent exercise?
George Robinson must decide how to invest $11,000 that he just inherited. What would be the future value of his investment after 4 years under each of the following three investment opportunities? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)a. 6.47 percent compounded quarterly. Value of investment after 4 years $ b. 6.09 percent compounded monthly. Value of investment after 4 years $ c. 6.09 percent compounded continuously. Value of investment after 4 years $
Vanessa was supposed to make a payment of $3,500 in 2 years and another payment for $1,800 in 5 years to Loon Company as part of a payment plan. Instead, he is trying to reach an agreement with the company where he would pay an upfront amount now, and an amount of $1,600 in 4 years. Assume that money is worth 8.40% compounded quarterly. a. Calculate the equivalent value of the $3,500 payment and the $1,800 payment today. Round to the nearest cent b. Calculate the upfront amount that he should pay under the alternative payment agreement so that the payments are equivalent. Round to the nearest cent.
Recently, Glenda Estes was interested in purchasing aHonda Acura. The salesperson indicated that the price ofthe car was either $27,600 cash or $6,900 at the end ofeach of 5 years. Compute the effective-interest rate to thenearest percent that Glenda would pay if she chooses tomake the five annual payments.
Your uncle offers you a choice of $103,000 in 10 years or $35,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. If money is discounted at 11 percent, what is the present value of the $103,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Jane Bauer has won the lottery and has the following four options for receiving her winnings: Receive $100,000 at the beginning of the current year Receive $108,000 at the end of the year Receive $20,000 at the end of each year for eight years Receive $10,000 at the end of each year for 30 years Jane can invest her winnings at an interest rate of 8% compounded annually at a major bank. Use the appropriate present or future value table: FV of $1, PV of $1, FV of Annuity of $1 and PV of Annuity of $1 Calculate the Present value for each of the above options. Round all answers to the nearest dollar. Present Value Option 1 $fill in the blank 1 Option 2 $fill in the blank 2 Option 3 $fill in the blank 3 Option 4 $fill in the blank 4 Which of the payment options should Jane choose?
Your grandfather has offered you a choice of one of the three following alternatives: $7,500 now; $2,200 a year for nine years; or $31,000 at the end of nine years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. Assuming you could earn 10 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.) b-1. If you could earn 11 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

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