(Present value of a complex stream) Don Draper has signed a contract that will pay him $60,000 at the end of each year for the next 7 years, plus an additional $140,000 at the end of year 7. If 7 percent is the appropriate discount rate, what is the present value of this contract? The present value of the contract is $ (Round to the nearest cent.)

(Present value of a complex stream) Don Draper has signed a contract that will pay him $60,000 at the end of each year for the next 7 years, plus an additional $140,000 at the end of year 7. If 7 percent is the appropriate discount rate, what is the present value of this contract? The present value of the contract is $ (Round to the nearest cent.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 12P

See similar textbooks

Similar questions

(Present value of a complex stream) Don Draper has signed a contract that will pay him $50,000 at the end of each year for the next 5 years, plus an additional $130,000 at the end of year 5. If 7 percent is the appropriate discount rate, what is the present value of this contract? The present value of the contract is $ (Round to the nearest cent.)
(Present value of a complex stream) Don Draper has signed a contract that will pay him $40,000 at the end of each year for the next 8 years, plus an additional $120,000 at the end of year 8. If 8 percent is the appropriate discount rate, what is the present value of this contract? a. What is the present value of $40,000 at the end of each year for the next 8 years if the discount rate is 8 percent? $nothing (Round to the nearest cent.)
(Present value of a complex stream) Don Draper has signed a contract that will pay him $70,000 at the end of each year for the next 5 years, plus an additional $110,000 at the end of year 5. If 9 percent is the appropriate discount rate, what is the present value of this contract? a. What is the present value of $70,000 at the end of each year for the next 5 years if the discount rate is 9 percent? (Round to the nearest cent.)
12. If a financial contract promises you to pay $110 next year and $121 the year after that, and if you lend $200 today, what is its yield to maturity in this contract? Write down the appropriate formula, calculation procedure, and the answer.
3. Consider the buyer of a FRA 6-9. The contract rate is 6.35% on a notional amount of $10 million. Calculate the settlement amount of the seller if the settlement rate is 6.85%. Assume a 30/360 day count basis.
(Q) A borrower takes out a 5/1 Hybrid ARM for $600,000 with an initial contract interest rate of 5.5%. The interest rate will adjust according to the 1-year LIBOR rate, plus a margin of 2%. At the first reset date, 1-year LIBOR is at 5.5%. What will the borrowers' monthly payment be immediately after the first reset? (State the payment as a positive number. Unless otherwise stated, you can assume 5/1 ARMs have a term of 30 years. Round your answer to 2 decimal places.)
4. A contract requires payments of $3762.00 today, $2666.00 in 2 years, and $5932.00 in 5 years. When can the contract be fulfilled by a single payment equal to the sum of the required payments if money is worth 7% p.a. compounded quarterly? State your answer in years and months (from 0 to 11 months). The contract can be fulfilled in year(s) and month(s).
contract would you prefer? 4. What are the present values of the following cash flows? A. $1,000 to be received in 8 years if the discount rate is 5 percent. B. $35 a year for 7 years compounded annually at 7 percent. C. a $100 perpetuity discounted at 9 percent.
ST Trucking just signed a $3.8 million contract. The contract calls for a payment of $1.1 million today, $1.3 million one year from today, and $1.4 million two years from today. What is this contract worth today at a discount rate of 8.7 percent? O a. $3,202,223.89 b. $2,108,001.32 c. $3,202,840.91 d. $3,783,648.48 e. $3,480,817.37
Peter Lynchpin wants to sell you an investment contract that pays equal $12,600 amounts at the end of each of the next 18 years. If you require an effective annual return of 7 percent on this investment, how much will you pay for the contract today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Value today
Finance Assuming we have the following immediate interest rates in the market: 1M - 2.5%, 2M - 2.8%, 3M - 3%, calculate the FRA 1v2 rate. Assume that each month has 30 days and a year has 360 days. If the investor has purchased this contract at the FRA rate calculated above and the interest rate in the market at the time the contract is settled is 3.2%, then in which direction the settlement flows (between the buyer and seller of the contract)? (please use the formula to solve it, thank you)
Suppose that a party wanted to enter an FRA that expires in 121 days and is based on 56-day LIBOR. The dealer quotes a rate of 0.033 on the FRA. Assume that at expiration, the 56-day LIBOR is 0.028, and the notional amount is USD10,000,000. What is the payoff of the FRA short position? |-7744.05