! Show Full Solution ! *using ANNUITY formulas only *use data given below Your lover has promised to give you P 6000 every year for 7 years. You will get the first 6000 5 years from now. If the banks are paying an annual interest rate of 4%, how much is this cash flow stream worth to you today?

! Show Full Solution ! using ANNUITY formulas only use data given below Your lover has promised to give you P 6000 every year for 7 years. You will get the first 6000 5 years from now. If the banks are paying an annual interest rate of 4%, how much is this cash flow stream worth to you today?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter4: Managing Your Cash And Savings

Section: Chapter Questions

Problem 7FPE: Calculating interest earned and future value of savings account. If you put 6,000 in a savings...

See similar textbooks

Related questions

Q: a. Find the present value of a deferred annuity of P30000 every three months for 3 years that is def...

A: Present Value(PV) refers to value of sum at current date which would be received or paid in future t...

Q: SITUATION 4: A forklift is worth P10.2M. It has a lifetime of 11 years and has a salvage value of 3....

A: Depreciation:- It is the reduction in cost due to normal wear and tear and effluxion of time. There ...

Q: The government will be decreasing income taxes. To an entity producing luxury bags, it would: A. Ex...

A: A change in income taxes results in a change in the economic growth because the disposable income of...

Q: Which of the following investment alternatives would provide the greatest ending wealth for your inv...

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions a...

Q: 75. Insurance companies wouldn’t exist unless customers were willing to pay the price of the insuran...

A: Insurance : Insurance can be understood as a contract under which a person or business obtains finan...

Q: At a nominal interest rate of 15% compounded bi-monthly, how long will it take to triple your money

A: The first step is to compute the effective annual rate. Here we are given a nominal interest rate th...

Q: A company with a required rate of return of 12 percent is considering a project with an RM40,000 ini...

A: IRR is the internal rate of return for a project. It is that rate at which the present value of the ...

Q: Your employer has offered to contribute $50 a week to your retirement savings account. Assume you wo...

A: Number of weeks (n) = 15 years x 52 weeks = 780 Weekly interest rate (i) = 8.5%/52 = 0.16346153846% ...

Q: BUSINESS FINANCE Name: Grade & Section: General Directions: ALL FORMS OF ALTERATIONS OR ERASURES WIL...

A: Note : As per the guidelines, only first question will be answered. Kindly post the remaining parts ...

Q: How to minimize or eliminate risk using diversification or other means.

A: Diversification is a process investment in multiple assets with the available amount.

Q: The aqua liquid money market mutual fund has nav $1 per share. During the year asset held by the fun...

A: Mutual Fund NAV is $1 per share Invested amount is $30,000 (start of the year) Fund appreciation rat...

Q: Bob Russell purchased a home theater system for $5200, paying $500 down. The balance was financed fo...

A: APR or Annual Percentage Rate is the quote of interest rate before taking compounding into effect. I...

Q: 5.0 4.0 Nominal Interest Rate 3.0 2.0 Real Interest Rate 1.0 -1.0 2.0 -3.0 2003 2004 2005 2006 2007 ...

Q: A & Z has to raise RM3 million for its five-year budget. The company is considering the following fi...

A: Expected Return The expected return is the minimum required rate of return which an investor require...

Q: w do yo

A: Introduction : A credit history can be understood as a history of a debtor's timely debt repayments....

Q: Which of the following is accurate regarding a real estate foreclosure transaction? A A foreclosur...

A: The question is based on the concept and principle of income tax for real estate transactions. Fore...

Q: Q4.02. Calculating the future value of 1,250 compounded annually for Ja. 10 years at 6 percent. b. 1...

A: Future Value: Using an expected rate of growth, future value (FV) is defined as the worth of a prese...

Q: 2013 2012 Revenues 3 751 331 021 3 430 700 496 Cost of Sales 3 067 218 589 2 799 747 640 Gross Profi...

A: a. Calculate the return on equity (ROE) in 2013 by dividing the net income by the average total equi...

Q: Rank the following car loan descriptions from highest payment ot lowest payment. The loan amount is ...

A: For the calculation purpose, the loan amount is assumed as 1,000.

Q: ou own a stock portfolio invested 16 percent in Stock Q, 24 percent in Stock R, 36 percent in Stock ...

A: Stock Weight Beta Q 16% 0.94 R 24% 1.00 S 36% 1.40 T 24% 1.85

Q: On March 15, year 1, ABC Corporation adopted a plan to accumulate P1,000,000 by September 1, year 5....

A: There are 2 types of annuity:- A) Ordinary Annuity B) Annuity in Advance A) Ordinary Annuity:- Whe...

Q: Dan took a loan of P560,000 from L. A. Finance to purchase a car. If the company charges compound in...

A: We need to use compound interest formula to calculate amount payable at the end of year 5.The formul...

Q: what is the value of the bond.

A: Bond: It is a debt instrument issued by the firm to raise capital from the investors. The bondholder...

Q: Find the savings plan balance after 24 months with an APR of 5% and monthly deposits of $250.

A: Future value of a present value is the value of that amount after taking into account the time value...

Q: Plz solve it within 30-40 mins I'll give you multiple upvote

A: Note : All the Given Options are incorrect , so we are solving the correct one for you as per figure...

Q: Over a certain period, large-company stocks had an average return of 12.19 percent, the average risk...

A: Risk free rate = 2.50% Return on small-company stocks = 17.13%

Q: Grace borrowed P150,000 payable in 2 years. To repay the loan, she must pay an amount every month wi...

A: Borrowed amount = P150,000 Time period = 2 years Rate = 6%

Q: One Corporation has two potential suppliers. Both are supplying the items at similar list prices and...

A: Trade credit: It refers to the credit paid to the supplier by its customer on the completion of cred...

Q: 11. Financial planning is making a forecast on the financial operation of the business. 12. The firs...

A: Finds are the basic need of any organization. Business raise the funds as per the needs from externa...

Q: What is a sales budget? a. A plan of items to be sold b. A plan of how much an item will cost c. A p...

A: Sales budget is an important budget prepared by the management of the organization.

Q: mpute for the NET PRESENT VALUE of the following project. You found that opening your own cake shop ...

A: Net present value is the difference between the current worth of cash inflows and withdrawals over a...

Q: Which of the following represents an Investing cash outflow? Select one: a. A decrease in Accounts ...

A: Cash flow statement A cash flow statement is the summary of cash flow which provides the details of ...

Q: True or False. 1. Procurement of funds is the same as allocation of funds to those in need. 2. Fin...

A: The planning, organising, directing, and managing of a company's financial activities, such as purch...

Q: What is difference between fair value and market value?

A: Fair Value: It refers to the asset's actual worth and is fundamentally derived. Hence, not determine...

Q: Current $6,000,000 $6,000,000 $500,000 $5,500,000 $5,000,000 Proposed Assets Debt $1,000,000 Equity ...

A: Let the breakeven EBIT = X

Q: What are the expected return and the standard deviation of return on in the optimal risky portfolio ...

A: Optimal risky portfolio is the portfolio that earns maximum returns at a minimum level of risk. It i...

Q: A man purchases a lot worth 5M if paid in cash. On installment basis, he paid P800,000 down payment,...

A: Cost = P5,000,000 Down payment = P800,000 Payment at year end = P900,000 Payment at third year end =...

Q: A man purchases a lot worth 5M if paid in cash. On installment basis, he paid P800,000 down payment,...

A: Data given: Lot worth = P 5M = P 5000000 Down payment = P800,000 Loan amount = P 5000000 - P 800,000...

Q: 29. CAPM and Hurdle Rates. A project under consideration has an internal rate of return of 14% and a...

A: Internal rate of return(IRR) is the discount rate for conventional series of cash flows that discoun...

Q: Question 6: Part C 2 of 3 JICA has let a shop in the subway redevelopment scheme to Ayala Malls a co...

A: Value of lease is the present value of rent paid over the period of 12 years. So lease value is pres...

Q: ABC has a problem with its cash conversion cycle. Based on ecords, ABC has receivables, inventory an...

A: Debtor Collection period id the period in which normally debtor paid their due to company. Inventory...

Q: Discuss the role of the financial manager or the Chief Finance Officer (CFO) in making decisions as ...

A: Management means effectively use of given sources to get maximum gain. Financial management means ma...

Q: Suppose the real rate on your investment is 9.5 percent and the inflation rate is 2.6 percent. What ...

A: Real Rate: It is the rate which the investor would receive by investing the money. The real rate of...

Q: ABC Corporation invested in one of DEF's ordinary shares that has a par value of P500 and a market v...

A: The stock value can be computed by dividing the expected dividend of next year by the difference of ...

Q: Suppose a stock price can go up by 15.25% or down by 13.25% over the next year. You own a one-year p...

A: Data given : Stock price can go up by 15.25% Stock price can go down by 13.25% Interest rate is 11% ...

Q: onsidering a merger, state

A: Introduction : In simple words, when two companies unites their operations to become one single comp...

Q: Briefly tell us how you approach problems from a quantitative and qualitative perspective. ( Financi...

A: As a financial management intern I have to look into aspects of budgeting (making different types of...

Q: A stock has a beta of 1.13, the expected return on the market is 10.7 percent, and the risk-free rat...

A: Beta (B) = 1.13 Market return (MR) = 10.7% Risk free rate (RF) = 4.6%

Q: What's the present value of $18,544.86 discounted back 5 years if the appropriate interest rate is 4...

A: Note : We are choosing here the nearest answer provided in the question ,else correct round off ans...

Q: Find the present value of a deferred annuity of P30000 every three months for 3 years that is deferr...

A: a. Determine the value of the fund after 1 year using the Excel PV function with the following input...

Question

! Show Full Solution !

*using ANNUITY formulas only

*use data given below

Your lover has promised to give you P 6000 every year for 7 years. You will get the first 6000 5 years from now. If the banks are paying an annual interest rate of 4%, how much is this cash flow stream worth to you today?

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
You are currently investing your money in a bank account which has a nominal annual rate of 7 percent, compounded monthly. How many years will it take for you to double your money? Identify the following variables to help solve problem: m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV
1. Suppose you can save $200 per year at the end of each year for 15 years and earn 7.49% interest per year. However, you cannot start saving for five years. What is the present value of this annuity? 2. What are the annual payments for a 4-year $4,000 loan if the interest rate is 9% per year? Make up a loan amortization schedule. 3. Consider the following future value problem. The respective cash flows for t = 0, 1, 2, and 3 are $3,000, $2,000, $8,000, and $5,000 and the discount rate is ten percent. What is the future value at t = 4? 4. You are offered a signing bonus of $2,000,000 or a future payment of $2,500,000 at the end of three years from now. If you can earn 7% on invested funds, would you take the signing bonus or wait for the future payment?
A new investment opportunity for you is an annuity that pays $550 at the END of each year for 3 years. You could earn a rate of return of 5.5% per year on your money in other, similar investments. What is the most you should pay for the annuity? Express your answer in dollars and cents.
Time for a lump sum to double: If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money? Future value -- annuity versus annuity due: What is the future value of a 7%, 5 year ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value be? Present and future values of a cash flow stream: An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 8% annually, what is its present value? Its future value? Loan amortization and EAR: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 12%, with interest paid monthly. What would be the monthly loan payment? What would be the loan’s EAR? Present value of a perpetuity: What s the present value of a $100…
You are currently investing your money in a bank account which has a nominal annual rate of 7 percent, compounded monthly. How many years will it take for you to double your money? m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV Must identify variables and use excel
Suppose you invest $210,000 in an annuity that returns 6 annual payments, with the first payment one year from now and each subsequent payment growing by 5%. At an interest rate of 8%, how much is the first annual payment you receive? Equivalent problem structure (as a borrower): Suppose you borrow $210,000 to be paid back over 6 years with the first payment one year from now and each subsequent payment growing by 5%. At an interest rate of 8%, how much is the first annual payment? Please round your answer to the nearest hundredth.
Suppose you would like to have P25,000 saved 6 years from now to pay towards your down payment on a new house. If you are going to make equal annual end-of-year payments to an investment account that pays 7 percent, how big do these annual payments need to be? (with cash flow chart)
Consider a stream of cash flows, where you receive $2,000.00 per year for 20 yearsEXCEPT year 12 during which you receive only $1,000.00. If the current market rate ofinterest is 7.200% (compounded annually), then what is the present value of this stream ofuneven cash flows? Hint: there are several ways to solve this problem but see if you cansolve it using a single annuity formula.
You have an investment account that started with $4,000 10 years ago and which now has grown to $9,000. a. What annual rate of return have you earned (you have made no additional contributions to the account)? b. If the savings bond earns 13% per year from now on, what will the account's value be 10 years from now?