Present value (with changing interest rates). Marty has been offered an injury settlement of $10,000 payable in 3 years. He wants to know what the present value of the injury settlement is if his opportunity cost is 5%. (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 8%? What if it is 12%?

Present value (with changing interest rates). Marty has been offered an injury settlement of $10,000 payable in 3 years. He wants to know what the present value of the injury settlement is if his opportunity cost is 5%. (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 8%? What if it is 12%?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 9EB: If you invest $15,000 today, how much will you have in (for further instructions on future value in...

See similar textbooks

Similar questions

If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
Present value (with changing interest rates). Marty has been offered an injury settlement of $11,000 payable in 4 years. He wants to know what the present value of the injury settlement is if his opportunity cost is 3.5%? (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 7%? What if it is 11.5%?
Present value (with changing interest rates). Marty has been offered an injury settlement of $15,000 payable in 3 years. He wants to know what the present value of the injury settlement is if his opportunity cost is 3.5%. (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 6%? What if it is 10.5%? If Marty's opportunity cost is 3.5%, what is the present value of the injury settlement? $nothing (Round to the nearest cent.) If Marty's opportunity cost is 6%, what is the present value of the injury settlement? $nothing (Round to the nearest cent.) If Marty's opportunity cost is 10.5%, what is the present value of the injury settlement? $nothing (Round to the nearest cent.)
Using either the Present Value formaula or the Future Value formula, how do I solve the following problem? Show all work! PV(CF) = CF / (1+r)n FV(CF) = CF * (1+r)n Mr. Johnson wants to buy an annuity due that will provide him with income of $50,000 per year for six years. The going interest rate is 6.25%. How much would it cost him to buy the annuity today? (Draw a timeline and show your work.)
May I ask for an explanation and solution to the question for a better understanding. Thank you! 1. If you invest P8,000 at 6.6% interest, compounding monthly, how much will you have in 3½ years? a. P10,072.50 b. P10,010.64 c. P29,848.00 d. P8,155.09
Chris offers you an investmet where if ou investment where if you invest $1,000 today, he'll return you $1,200 in 2 years. What is the annual rate of return of this investment? Choose the closest. a) 10.5% b) 9.0% c) 10.0% d) 9.5%
Jim Nance has been offered an investment that will pay him $860 three years from today. a. If his opportunity cost is 9% compounded annually, what value should he place on this opportunity today? b. What is the most he should pay to purchase this payment today? c. If Jim can purchase this investment for less than the amount calculated in part (a), what does that imply about the rate of return that he will earn on the investment?
X-person has committed to a payment that needs to pay BD 80,000 every year at the end of each next eleven years. What will be the future amount of Ahmed if it were to instead settle the claim immediately with a single payment, with an interest rate of 6%?solve the problem showing cash flow, and final answer using a suitable formula.
You will deposit $30,000 per year into an account beginning today that pays 13 percent per year. How long (in years) would it take for you want have a total of $1,000,000 at retirement? m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV Must identify variables and use excel
You have to decide whether to invest $100 in a friend's enterprise, where in a year's time the money will increase to $130. You have agreed that your friend will then repay you $120, keeping $10 for himself But instead he may choose to run away with the whole $130. Any of your money that you don't invest in the enterprise you can invest elsewhere safely at the prevailing rate of interest r and get $100 (1+r) next year. For interest rate r> __A___% there is an equilibrium outcome of the infinitely repeated game in which each period you invest with your friend and he repays as agreed. If the rate of interst is 10% per year, an alternative profit-splitting agreement giving $__B___ for the friend is an equilibrium outcome of the infinitely repeated game, where each period you invest with your friend and he repays as agreed. Answer A= ? Answer B= ?
Mr. Y wishes to find out the value of investment which return Ksh. 10,000 forever, discounted at 10 percent?
f you think you can sell an asset for $15,000 in eight (8) years and you think the appropriate discount rate is 5%, how much would you be willing to pay for the asset today? Select one: a. $15,000 b. $10,153 c. $11,236 d. $15,771.00 e. None of the above