a Suppose you want to start saving for retirement. You decide tocontinuously invest $15000 of your income each year in a risk-free investmentwith a 6% yearly interest rate, compounded continuously.If y is the value of the investment, and t is in years:dydtYour answer should be in terms of y.You start investing at t =O so y(0) = 0.y(t)What is the size of your investment after 20 years.y(20) =|(?earchhp

Data given: Rate of installment (continuously)= $15000 Rate of interest = 6%

Answered: Suppose you want to start saving for…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13EA: Jullo Company is considering the purchase of a new bubble packaging machine. If the machine will...

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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%
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
If you invest $12,000 today, how much will you have in (for further Instructions on future value in Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at l5% D. 19 years at 18%
Jullo Company is considering the purchase of a new bubble packaging machine. If the machine will provide $20,000 annual savings for 10 years and can be sold for $50,000 at the end of the period, what is the present value of the machine investment at a 9% interest rate with savings realized at year end?
Consider two interest rate scenarios for investing over next 20 years. In steady scenario A, you get interested of 4% each year. In choppy scenario B, in the first year you get that rate plus 10% but then in next year get that rate minus 10% and so forth. The average rate is the same in each scenario. But for an initial investment of $4000, how much more is A worth than B at the end of the period?
1. You have an investment opportunity that requires an initial investment of GH¢5,000 today and will pay GH¢6,000 in a year’s time. If an alternative investment with similar risk pays 25%, should you invest? 2. You will retire in 18 years and you currently have GH¢250,000 saved, and your plan is to have GH¢1,000,000 at your retirement. What annual interest rate must you earn to reach this goal, assuming you do not save any additional funds? 3. With practical example(s), differentiate between compounding and discounting. 4. As a Business Finance student, what is the essence of the valuation principle in your personal life?
a. Suppose a 65-year-old is contemplating retirement, expects to live for another 20 years, has a GHȼ1 million nest egg, expects the investments to earn a nominal annual rate of 6%, expects inflation to average 3% per year, and wants to withdraw a constant real amount annually over the next 20 years so as to maintain a constant standard of living. If the first withdrawal is to be made today, what is the amount of that initial withdrawal? b. Suppose you need to accumulate GHȼ100,000 in 10 years. You plan to make a deposit in a bank now, at Time 0, and then make 9 more deposits at the beginning of each of the following 9 years, for a total of 10 deposits. The bank pays 6% interest, you expect inflation to be 2% per year, and you plan to increase your annual deposits at the inflation rate. How much must you deposit initially?
You wish to have an investment that will bring about $20 000 infive years, and the rate of return is 8% per annum. Required:a. In term of time value of money, what is the amount of $20,000 represent?b. How much do you need to invest now if the rate is compounded annually(to the nearest dollar)?c. If you have $20,000 now and put the sum into a bank account that pays5% per year. How much will you have in 6 years if the rate is compounded semiannually, quarterly, monthly and daily (to the nearest dollar)?
Suppose you have an investment offer that guarantees an average investment gain of $1,000 per year. (a) What is the average rate of change (in dollars per year) of this investment? $? per year (b) If the value of the investment today is $10,000, what will be the value (in dollars) of the investment in 2 years? $?
You wish to have an investment that will bring about $50 000 in tenyears, and the rate of return is 8% per annum. Required:a. In term of time value of money, what is the amount of $50,000 represent?b. How much do you need to invest now if the rate is compounded annually(to the nearest dollar)?c. If you have $50,000 now and put the sum into a bank account that pays5% per year. How much will you have in 8 years if the rate is compounded semiannually, quarterly, monthly and daily (to the nearest dollar)?
You’re trying to choose between two different investments, both of which will cost $65,000 today. Investment A will give you $125,000 in 6 years and Investment B will give you $205,000 in 10 years. Which of the two investments should you choose? Why? How will your answer change, if any, if interest rates are expected to increase over the next 10 years. (Explain using the appropriate equations and show all work)
You are considering the purchase of real estate that will provide perpetual income that should average $70,000 per year. How much will you pay for the property if you believe it's market risk is the same as the market portfolio's? The T-bill rate is 5% and the expected market return is 8.0%.

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