Peter Lynchpin wants to sell you an investment contract that pays equal $13,500 amounts at the end of each of the next 19 years. If you require an effective annual return of 10 percent on this investment, how much will you pay for the contract today?

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

A: We are required to find the solution to this question with the help of an Excel  Formula,

Q: You have just borrowed $240,000 and you agree to pay it back over the next 20 years in 20 equal…

A: Details given are : Present value of borrowing = $240000 Time period = 20 years Interest rate = 11%…

Q: An engineer has received $10 000 from his employer for a patent disclosure. He has decided to invest…

A: Final value is computed in nominal terms as the compounded value of the initial investment. The…

Q: Assume that you will have a 10-year, $14,000 loan to repay when you graduate from college next…

A: Given, Loan amount = $14,000 Annual payment = $2,377 Interest expense = 11%

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

A: Present Value of Ordinary Annuity refers to a concept which determines the value of cash flows at…

Q: An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you…

A: Time value of money is a concept that deals with calculating the actual worth of money at present…

Q: TA Corp. has a consulting contract with a firm that states that he will receive annual payments of…

A: We need to use present value of annuity due(payment due at beginning of year) formula for…

Q: Find the PV of Dalvi’s contract if he gets $25 each year for the next 10 years; a Balloon Payment of…

A: Signing Amount is paid to initiate the contract in beginning whereas Balloon Payment is lump-sum…

Q: You are considering purchasing an investment contract that will eventually pay you $4000 per year at…

A: Price we should pay is present value of cash flows

Q: You are offered an investment that will pay •$200 in year 1, •$400 the next year, •$600 the…

A: Time value tells that value received today is of more value than that of receiving the exact value…

Q: Don Draper has signed a contract that will pay him   $50,000 at the end of each year for the next…

A: Contract's Cash Flows: Contract's Cash Flows represent the dollar amount that a contract holder will…

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 questions. As per our Q&A guidelines, must be answered only…

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: Julia graduated in 2020. She was recruited by an investment banker in Trinidad and they offered her…

A: Interest Rate is 10% compounded monthly Time period is 2 years. 1st Option $480,000 per year for the…

Q: %.

A: Present Value = First cashflow + Cash flow * PVAF(r, n)                        = First cashflow +…

Q: Suppose you are faced with several options of a signing contract. Which option would you choose?…

A: Present Value(PV) is value of future amount or series of future payment which are either received or…

Q: Tom Thompson expects to invest $10,000 at 12% and, at the end of a certain period, receive $96,463.…

A: Future value of an annuity: It refers to an amount received or paid equally for a specified number…

Q: Your uncle is offering you a deal: - To pay you at the end of every month, 1000EUR, during 15 years…

A: Calculation of the value of the each option :

Q: Your uncle will sell you his bicycle shop for $170,000, with "seller financing," at a 6.0% nominal…

A: Loan amount = Monthly Payment * [1-(1+i)^-n]/i + Final Payment/ (1+i)^n 170000 = Monthly Payment *…

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…

A: Present value of future cash inflows will be equal to the worth of contract today.   Worth of…

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: 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 sign a contract for annual payments of $35 each year for the next 8 years.  There is a signing…

A: Present value is the current value of the amounts that can be made in future. Present value can be…

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

A: We need to calculate present value of both options by using present value of ordinary annuity…

Q: An investment  opportunity requires a payment of $750 for 12 years, starting a year  from today. If…

A: We need to use the concept of time value of money to solve the question. According to the concept of…

Q: Assume that you will have a 10-year, $20,000 loan to repay when you graduate from college next…

A: Note: As per the Policy, We’ll answer the first question since the exact one wasn’t specified.…

Q: An investor pays $200 per month into a real estate investment that promises to pay an annual rate of…

A: COMPOUNDED MONTHLY C D RATE (8%/12) 0.66667% NPER (n)  5*12 PMT 200 PRESENT VALUE 0

Q: Marian Plunket owns her own business and is considering an investment. If she undertakes the…

A: Cash flow (Year 1 - 3) = $4440 Cash flow (Year 0) = - $1110 Cash flow (Year 2) = - $5550 Interest…

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: An investment promises to pay into an account that pays you 6 percent annually, $150 per month for…

A: Time value tells that the money received today has more value than that of receiving the same amount…

Q: ou have been offered an investment that will pay you a lump sum of $30,000 25 years from today,…

A: Answer : Lump sum = $30,000 Interest rate = 6% Time = 25 years PV 6%, 25year = 1/1.06^25 = 0.233 PVA…

Q: If the interest rate is 9 percent compounded monthly, what is the value today of each option?

A: Present Value: It represents the present worth of the future sum of the amount or future annuity…

Q: You are going to receive a payment of $80 at the end of each year for the next 20 years. If you…

A: The future value of the annuity is the total value of all the payments which is occurred regularly…

Q: If you buy a factory for $250,000 and the terms are 20 percent down, the balance to paid off over 30…

A: Purchase consideration for the facor, S = $ 250,000Down payment = 20%Yoour own contribution = Down…

Q: What would you pay for an investment that pays you $31000 at the end of each year for the next…

A: Note: Amount paid for the investment will be equal to the present value of amount to be received in…

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…

Q: How much will you have after 15 years?

A: Future value of annuity is the total worth of periodic payments made on regular intervals at a…

Q: The manager has 5 employees whose combined salaries through the end of this year are $300,000. If he…

A: The current worth of funds to be received in the future with one or more payments, discounted at a…

Q: An engineer wants to have P100,000 at the end of three years. How much would the engineer have to…

A: Present  value is calculated by discounting the future value with the rate of interest.   Present…

Types of Insurance Contract

Insurance is a contract wherein an individual or entity gets financial protection from the insurance company for any damages or losses incurred. The individual or entity is called the insured, whereas the insurance company is called the insurer. The insured and the insurer enter a legal contract for a fixed term called the insurance term, and the contract is called an insurance policy.