Answered: What is the value of today of an…

What is the value of today of an investment that will pay $100 per year for 5 years. Assume first payment is made 1 year from today and the interest rate is 7%?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EA: How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one...

See similar textbooks

Related questions

Q: What is the future value of an initial $100 after 3 years if it is invested in an account paying 10…

A: Future value is defined as the current asset value at the date of future on the basis of an assumed…

Q: How much should be invested each year for 10 years to provide you with $7000 per year for the next…

A: Annuity means no. of payments which are equal in size and made at equal length of intervals. Person…

Q: a. What single investment made today, earning 10 % annual interest, will be worth 10,000 TL at the…

A: Given information: Future worth is 10,000 Interest rate is 10% Number of years is 3

Q: If $5,000 is invested at an annual rate of 6.5% compounded continuously, the future value S at any…

A: Information Provided; Principal = $5000 Annual rate = 6.5% compounded continously

Q: Compute the future value of $536 invested every year if the appropriate rate is 11.2% and you invest…

A: Annual deposit (A) = $536 r = 11.2% n = 4 years

Q: What is the accumulated value of the 5000 TL investment at the end of each year with 3% interest…

A: The accumulated value is calculated as future value of annuity

Q: What single investment made today, earning 10 % annual interest, will be worth 10,000 TL at the end…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: Approximately how many years are needed to double a $100 investment when interest rates are 5.50…

A: Future value is the value of the asset at a particular time. The present value of the asset when…

Q: An investment pays 10% interest compounded continuously. If money is invested steadily at the rate…

A: Continuous Compounding: It is the maximum limit of the compound interest if it is calculated and…

Q: Approximately how many years does it take to double a $600 investment when interest rates are 6…

A: In the above question we need to compute the time period i.e. number of years required to make the…

Q: 3. An investment offers P4,900 per year for 15 years, with the first payment occurring one year…

A: An Annuity is a continuous flow of systematic timely cash flows made or received for a stipulated…

Q: If the current rate of interest is 6% APR, what is the future value of an investment that pays…

A: Interest rate = 6% Payment every two years = AED 15,000 Future value period = 20 Years

Q: d it will become $ 6,000 at the end of 4 years, determine the nominal rate of interest and the…

A: The given problem can be solved using using RATE and EFFECT function in excel. RATE function…

Q: What is the present value (PV) of an investment that pays $90,000 every year for four years if the…

A: The present value of an annuity is the sum of the discounted value of the periodic cash flows.…

Q: How much will $100 grow to if invested at an annual interest rate of 10.50% for 7 years?

A: Here,Principal amount: $ 100Rate of interest: 10.50%Period of investment: 7 yearsAmount at the end…

Q: Assume the annual interest rate is 6%. Calculate the value of an investment that pays $100 every two…

A: Present value of perpetuity is = cash flow/rate

Q: Suppose that $4000 is invested each quarter, for the next 10 years. What is the future worth if the…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: What is the future value in 12 years of $1,000 payments received at the beginning of each year for…

A: As a first step, let's gather all the information that question has to offer.Annuity investment = A…

Q: If you invest 5000 dollars today at a compound interest rate of 10% compounded semi-annually, what…

A: Future value = Present value * (1 + rate per period )^ No. of period

Q: Suppose that you have $100 to invest for a period of 5 years at an interest rate of 10% per year.…

A: Given: Present value $100 Years 5 Annual rate 10%

Q: What is the future value in 10 years of 1,500 payments received at the end of each year for the next…

A: * Note : As per policy only one question will be answered. Please refer to the image below.

Q: approximately how many years would it take for an investment to grow fourfold if it were invested at…

A: Given: Rate=11%/4=0.0275Pmt =0Pv =$-1FV =$4

Q: Approximately how many years would it take for an investment to grow fivefold if it were invested…

A: Investment amount (P) = $1 Future value (FV) = $5 Interest rate (r) = 9% Number of compounding per…

Q: If you make an investment of $5000 and the investment earns a continuous annual interest rate of…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: What is the maximum amount you should pay today for an investment that pays a single future cash…

A: Future cash flow (FV) = $25000 Interest rate = 2% Semi annual interest rate (r) = 2%/2 = 1% Period =…

Q: Suppose you invest $1000 at 6% per annum compounded annually. Approximately how many years would it…

A: In the given question we require to calculate the the number of years in which $1000 will become…

Q: If you invest 1000.00 per year for 3 years starting 1 year from now and 1500.00 per year for 5years…

A: It can be calculated using FV (Future Value) formula in excel FV (rate, nper, pmt, [Pv], [type])…

Q: Suppose you have an investment worth $800 and you want it to increase in value by 400%. a) What is…

A: Investment amount = $ 800 Increase in value = 400%

Q: How much must I start investing now, per month, to have $1M in 25 years? The bank pays an APR of…

A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: uppose that $5000 is invested each quarter, for the next 20 years. what is the future worth if the…

A: An annuity is a sum of series of payments after every year or after every quarter. An annuity can be…

Q: What is the future equivalent of $1,000 invested at 6% simple interest per year for 3 years?

A: Simple interest is the type of interest that is calculated on the principal amount invested, it is…

Q: What is the future value in 10 years of 1500 payments received at the end of each year for tge next…

A: In the given question, 1,500 will be received (invested) at the end of each year for next 10 years.…

Q: The doubling time of an investment with continuous compound interest is 12.6 years. If the…

A: First we will calculate the rate of interest required to double the investment with compounding and…

Q: What is the future value of a series of $4,500 annual payments received at the end of each of the…

A: Annuity refers to series of equalized payments that are either made start or end of specific…

Q: What single investment made today, earning 10 % annual interest, will be worth 10,000 TL at the end…

A: Given:Annual interest =10%Amount in future =$10000Time period =3 years

Q: avings account that yields 12% compounded quarterly, what would our investment grow to at the end of…

A: The given problem can be solved using FV and EFFECT function in excel. FV function computes future…

Q: If you were to invest $2000 today and in return receive $450 anually for 6 years, what is your…

A: N=6 PMT=450 PV=2000 I=? 2000=450/(1+I)+450/(1+I)^2........+450/(1+I)^6

Q: An investment will give you monthly payments of $890 for 9 years. If your required return is 8.13%,…

A: Monthly payment (M) = $890 n = 9 years = 108 months r = 8.13% per annum = 0.6775% per month

Q: An investment company promises to triple your money in 10 years. Accordingly, what isthe monthly…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: What will $82,000 grow to be in 11 years if it is invested today at 8% and the interest rate is…

A: The formula to compute future value as follows: Future value=Invested amount×1+rmn×m

Q: the savings account that yields 12% compounded quarterly, what would our investment grow to at the…

A: The given problem can be solved using FV and EFFECT function in excel. FV function computes future…

Q: What is the present value of an investment that will pay $1,000 in one year's time, and $1,000 every…

A: Calculation of Present value of perpetuity:Answer:The present value of the investment is $12,500

Q: How much should be invested each year for 10 years to provide you with $4000 per year for the next…

A: Present value include the value without interest rate and future value includes the value with…

Question

100%

What is the value of today of an investment that will pay $100 per year for 5 years. Assume first payment is made 1 year from today and the interest rate is 7%?

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

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

How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one year from now and the rate is 8%?
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 $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%
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%
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?
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.