• Suppose you are offered two options: (i) receive Taka 30,000 at the end of 5 years or (ii) receive Taka P today and another P after two years. When you invest the Takas in business that pays 8% or more profit yearly. What value of P would be same as promise of Taka 30,000 to you after 5 years? Assume there is no risk in this future payment.
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- You sit down with the world's least helpful financial advisor who never tells you the future value of any investments but will give you the other info you need. Which investment option gives you the most money at the end of 10 years? Options: (A) Investing $1,000 at the beginning of each year with an annual interest rate of 8.5%. Interest compounds annually. (B) Investing $83.33 each month with an annual interest rate of 8%. Interest compounds monthly. (C) Investing $10,000 today with an annual interest rate of 5%. Interest compounds monthly.Bobby has heard the importance of saving early for retirement. He wants to retire in 35 years. But he really likes traveling. Right now, he spends, on average, about $600 a month traveling. He is trying to decide if he should start saving his travel money for retirement now, or if he can continue traveling a few more years before beginning to save. Assume that he can find an annuity that pays 4.75% compounded quarterly. What is his future value if: a) He starts saving now? N: P/Y: I%: C/Y: PMT: End or Begin $54,911.29 $658,935.54 $823,669.42 1,000,000.00Imagine that you are a completely risk indifferent investor. A client would like topay you and gives you two options how they would be willing to pay.1. An immediate payment of $50,0002. A monthly payment of $3,000 over the next four years.You believe that the interest rate over the next four years will be 6%. Whichoption do you prefer? One of your advisors thinks that it will be rather 8%, whileanother one calculates it in a more conservative way and expects rather 4%.Would following one of them change your decision? In which way?
- Suppose you are considering working at a local coffee shop 5nights a week. You expect to save $125 a month from the jobafter meeting all your expenses. To be eligible for the job youmust undergo a week’s work training at the coffee shop.Assume the training costs you $100.Suppose you plan to workthe next 9 months there and you can borrow and lend moneyat an annual rate of 6% compounded monthly.What is the net present value of this work to you?Let's say that you invest $8000 at 3.1 percent annual interest for 6 years. What will its value be? Carefully follow all numeric directions. Round intermediate steps to four decimal places and final answers to two.Ab 4 Economics Nabil is considering buying a house while he is at university. The house costs $200 000 today. Renting out part of the house and living in the rest over his five years at school will net, after expenses, $2000 per month. He estimates that he will sell the house after five years for $210 000. If Nabil’s MARR is 6 percent compounded monthly, should he buy the house? Use annual worth.
- 1. If money has a time value, what do you think is the imoact of doing nothing with it (money)?\ 2. For investment decisions, would you recommend the payback period? why or why not?On your 23rd birthday you decide to invest $4,500 (10% of your annual salary) in a mutual fund earning 7% per year. You will continue to make annual deposits equal to 10% of your annual salary until you retire at age 62 (40 years after you started your job). You expect your salary to increase by an average of 4% each year during this time. How much money will you have accumulated in your mutual fund when you retire?As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI (in $), using this table and the monthly PITI (in $) for the mortgage. (Round dollars to the nearest cent.) AmountFinanced InterestRate Termof Loan(years) MonthlyPI AnnualPropertyTax AnnualInsurance MonthlyPITI $260,000 9.50% 25 $ $6,573 $2,126 $
- a) Suppose you put $350 into a bank account today. Interest is paid annually and the annual interest rate is 6 percent. What is the future value of the $350 after 4 years? b) Suppose you are deciding whether to buy a particular bond from your local municipality. If you buy the bond and hold it for 4 years, then at that time you will receive a payment of $10,000. Assume the interest rateis6percent. Underwhatcircumstanceswillyoubuythebond?Meaninguptowhatpriceareyou willing to pay.2. You have been hired as a financial advisor to Kansas City Chiefs quarterback, Patrick Mahomes. He has received two offers for playing professional basketball and wants to select the best offer, based on considerations of money only. Offer A is a $35m offer for $7m a year for 5 years. Offer B is a $36m offer of $5m a year for four years and $16m in year 5. What is your advice? (Hint: compare the present value of each contract by assuming a range of interest rate, say 1% - 7%). Show all the workfind the Present Worth when i is 7% EOY NCF ($) 1 100 2 150 3 200 4 250