You want to create an endowment income of $35,000 per year for Oxfordshire Charity, bit the first payment will not be made untia the 4th year's time. a. If you can earn a return of 8% APR on your investment, and if the payment is made on a monthly basis, calculate how much to invest now?

You want to create an endowment income of $35,000 per year for Oxfordshire Charity, bit the first payment will not be made untia the 4th year's time. a. If you can earn a return of 8% APR on your investment, and if the payment is made on a monthly basis, calculate how much to invest now?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 23E

See similar textbooks

Related questions

Q: Neverland Company, a retailer, plans to sell 15,000 units of Product X during the month of August. I...

A: Sales = 15000 units Opening stock = 2500 units Closing units = 2000 units

Q: BHP Billiton is the world's largest mining firm. BHP expects to produce 2.25 billion pounds of coppe...

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the questio...

Q: If the sum of P12,000.00 is deposited in an account earning interest rate of 9% compounded quarterly...

A: Future Value: The future value is the amount that will be received at the end of a certain period. T...

Q: ousiness takes out a loan of $500 000 from a bank and agrees to repay th ing a fixed amount of $60 0...

A: Loans are paid by the annual equal payments that carry the payment of interest and payment for the p...

Q: Suppose you obtain a 20-year mortgage loan of $193,000 at an annual interest rate of 8.4%. The annua...

A: Given Information in the question:- PV (present value) = $193,000 Rate = 8.4% Time (N) = 20 year Ann...

Q: Consider the following information and then calculate the required rate of return for the Global Equ...

A: since: Where: Ra = Expected return on an investment Rrf = Risk-free rate Ba = Beta of the investme...

Q: ose an investment will pay $21,000 in 19 years from now. If you can earn 16.35% interest compounded ...

A: The today value will be the present value of future value considering the discount rate and period o...

Q: . What is the net present value $ of project A? 2. what is the profitability index for project A? ...

A: Net Present Value: It represents a measure of the profitability of a project or investment in dolla...

Q: A corporation uses a type of motor truck which costs P 250,000, with life of 2 years and final salva...

A: The annual cost method helps in comparing two different projects having different periods. The annua...

Q: What is the net asset value of an investment company with $9,600,000 in assets, $610,000 in current ...

A: The difference between the assets and liabilities is known as the net assets, net worth, or capital ...

Q: a) Assess the financial performance of BWealth Ltd using the information given. b) Briefly explain ...

A: Financial KPIs (key performance indicators) are metric entities used to track, measure, and analyze ...

Q: How do gross profits, operating income, and net income differ

A: In finance when making or analyzing an income statement we look into different types of income or pr...

Q: Suppose now that we have a multi-period project . The project costs $100,000 Perlodi Perlod2 Perlod3...

A: Here,

Q: necessary, refer to the list of financial formulas. (a) Assuming no withdrawals are made, how much m...

A: Future value of investment is the the principal amount deposited and interest accumulated over the p...

Q: Explain the importance of a business report.

A: A business report is a report or a document which is essentially includes an array of data and analy...

Q: What is the price of the first bond (and the second bond) and Calculate j.

A: Bond valuation refers to a method which is used to compute the current value or present value (PV) o...

Q: 3. Refer to the following table of cash flows: End of Year (EOY) Cash Flow 8 12 16 P5,000 P5,000 P5,...

A: Annual worth assessments are substantially the same as present worth comparisons, with the exception...

Q: The Ewing Distribution Company is planning a $100 million expansion of its chain of discount service...

A: Given, Amount required for expansion is $100 million

Q: 21.Calculate the present value (principal) and the compound interest (in $). Use Table 11-2. Round y...

A: The present value and compound interest can be calculated as per the function of present value

Q: Twelve months ago, you purchased the shares of a no-load mutual fund for $22.35 per share. The fund ...

A: Given in the question, The purchase price of the share = $22.35 per share Cash dividends = $0.70 C...

Q: You recently went to work for Allied Components Company, a supplier of auto repair parts used in the...

A: Here, Discount rate = 10% To Find: IRR of each project =? Payback Period =?

Q: What is a firm’s net working capital? And what does it tell you about the liquidity of the firm?

A: Working capital of the firm means net assets of the firm. Working capital can be find as total asset...

Q: FRO082 (7% coupon, paid semi-annually) will mature on September 15, 2030. If you buy this bond on Ma...

A: Cash Flow at the time of maturity = 100 Interest (Annuity) semiannually = (100 * 7%) * 6 / 12 = 3....

Q: A bond has an interest rate of 15% for the next 5 years The current cost and par value of the bond i...

A: Net present value is the sum of the present values of net of all future cash outflows and inflows di...

Q: An investment of $100,000 in safe 10-year corporate bonds yields an average of 12% per year, payable...

A: Time value of money (TVM) is used to measure the value of money at different point of time in the fu...

Q: What is your expected annual rate of return for this portfolio: stock A 1000 shares at $22/share exp...

A: Given, Stock A has 1000 shares at $22/share Stock B has 750 shares $11.50/share Bond $25000 Money ma...

Q: Imagine you work for a company that uses gainsharing. Do you think you would like it? Why or why not...

A: Gainsharing is a management system that encourages employees to improve their performance by involvi...

Q: 4. Mr. Torres borrows P 150,000 and agrees to pay it with interest at 16 % compounded quarterly inst...

A: Loan amount (PV) = P150,000 Interest rate = 16% Quarterly interest rate (r) = 16%/4 = 4% Quarterly p...

Q: 1. The New York Stock Exchange is primarily a. A secondary market. b. An organized auction market. c...

A: A secondary market is a market where shares of company are traded among the sellers and prospective ...

Q: . What is the present worth of 4100 deposited at the end of every three months for 5years if the int...

A: The future value is the amount deposited and interest accumulated over the period of time. The prese...

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...

A: Cost of equity with constant growth rate in dividends forever With next year dividend (D1), current ...

Q: What perpetual amount will you receive annually starting next year if you were able to deposit 130,...

A: Here, Amount Deposited five years ago is 130,000 Interest Rate is 10.5% Compounding Period is Annual...

Q: The VSE Corporation currently pays no dividend because of depressed earnings. A recent change in man...

A: It is assumed that the dividend will grow at 12% forever after 4 years Given D1 = $0.5D2 = $1.25 D3 ...

Q: The adult children of a college professor are endowing a scholarship fund in their father’s name. Wh...

A: The annual scholarship of $1,000 is a perpetuity. Perpetuity is an annuity that continues or goes ...

Q: An FSA can be used to pay for over-the-counter as well as prescription medications. Kendra bought th...

A: FSA or Flexible spending account is an employer sponsored healthcare benefit. This account allows t...

Q: The scenario is designed to help you determine and evaluate the payment amount of a car loan and a m...

A: Household income = $36,000 per year or Monthly Income = $3,000

Q: A logistics firm is planning to acquire a winching machine which costs $85000 having life span of 6 ...

A: Present value of future amount With interest rate (r), period (n) and future value (FV), the present...

Q: Why might disinflation prove favorable to financial assets?

A: Disinflation is the reduction or lowering of the pace of inflation. In other words in situation of d...

Q: places.) (a) Wesbanco offers an account 7.28 % interest compounded daily. APY = Number %3D (b) PNC o...

A: Effective annual rate (EAR) refers to a real interest rate which an investor is expect from his inve...

Q: Maria loaned an amount of 100,000 in payable in 15 equals installments. The first payment was made a...

A: Loan amount (L) = 100000 Number of quarterly payments (n) = 15 First payment after 1 year (4 quarter...

Q: A $1,000 bond has a 5 percent coupon and currently sells for $890. The bond matures after four years...

A: Bonds is an investment security in which investors invest amount in exchange of regular interest rec...

Q: The Northern Mart’s balance sheet at the close of 2021 appeared as follows. They are a very successf...

A: Weighted average cost of capital is the average cost of capital which is calculated by multiplying t...

Q: Your firm is contemplating the purchase of a new $595,000 computer-based order entry system. The sys...

A: Here, Initial Investment is $595,000 Salvage Value of is $81,000 Savings before taxes every year is ...

Q: Contributions of $146.30 are made at the beginning of every three months into an RRSP for 17 years. ...

A: Future worth is the amount that an investor expects from the cash flows in each period. Future worth...

Q: Your utility company will need to buy 100,000 barrels of oil in 10 days' time, and it is worried abo...

A: Day Price 0 $ 60.03 1 $ 59.46 2 $ 57.54 3 $ 57.73 4 $ 57.95 5 $ 59.48 6 $ 60.52...

Q: Quick loans will loan you $500 with the understanding that you will repay them $598 in 2 weeks what ...

A: APR is the annual percentage rate that is applied on the loan for the respective tenure during which...

Q: A project requires an initial outlay of $80000 and produces a return of $20000 at the end of year 1,...

A: Solution:- Internal Rate of Return (IRR) means the rate at return the project is yielding. At IRR, N...

Q: 1. If P500.00 is invested at the end of each year for 6 years at an annual interest rate of 7%, what...

A: Since you have posted multiple questions, we shall be solving the first one for you. In case you wis...

Q: Commercial Bank of Windhoek has credited Upington Solar Corporation with R550m, with a maturity of t...

A: Data given:: Loan amount = R 550 m Expected loss = R 16.5 m Recovery rate = 23% Required:: Probabi...

Q: I won 15 000.00 on lotto, invest for 3 years so I can earn interest. Bank has offered 10% interest. ...

A: Compound interest is calculated on the opening balance of investment instead of the initial investme...

Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

You want to create an endowment income of $35,000 per year for Oxtordshire Charity, but the Tirst payment will not be made until
the 4th year's time.
a. If you can earn a return of 8% APR on your investment, and if the payment is made on a monthly basis, calculate how
much to invest now?
$5,133,086.81
B.
$4,133,086.81
$5,233,086.81
$4,233,086.81
$5,250,000.81

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 by step

Solved in 2 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

Determine the amount of money required to set up a charitable endowment that pays the amount P each year indefinitely for the annual interest rate r compounded continuously. P = $13,000, r = 6% STEP 1: We start with the present value of a perpetuity, which is defined as follows. Present value = P r Here, represents the size of each annual payment in dollars, and represents the annual interest rate. STEP 2: Calculate the present value. (Round your answer to two decimal places.)
K Suppose someone wants to accumulate $65,000 for a college fund over the next 15 years. Determine whether the following investment plans will allow the person to reach the goal. Assume the compounding and payment periods are the same. The person deposits $55 per month into an account with an APR of 7%. ... Will the person meet the goal? Select the correct choice below and fill in the answer box to complete your choice. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) O A. No, because the amount that will be in the college fund, $ is less than the goal of $65,000. OB. Yes, because the amount that will be in the college fund, $ is more than the goal of $65,000. 3
You decided to fund a charity for ten years. The first payment will be made one year from today (at the end of year one) and will be $8,350. Each year after that, the charity will receive payment from you annually. The payment will increase at a rate of 2% per year after the second payment. If the annual interest rate is 15%, what is the present value of this endowment? no excel and calculations please
You want to endow a scholarship that will pay $9,000 per year forever, starting one year from now. If the school's endowment discount rate is 10%, what amount must you donate to endow the scholarship? The amount you must donate is $ View an example Get more help - .... (Round to the nearest cent.) Clear all
An endowment fund is set up today. It provides payments of $1500 a year for 6- years (first payment one year from now) followed by $2000 a year thereafter forever. If the interest rate is j1 = 6%, how much is needed to be deposited (invested) today? (Answer to nearest dollar
You want to endow a scholarship that will pay $ 8 comma 000$8,000 per year forever, starting one year from now. If the school's endowment discount rate is 4 %4%, what amount must you donate to endow the scholarship? How would your answer change if you endow it now, but it makes the first award to a student 10 years from today?
You are scheduled to receive $10,000 in three years. When you receive it, you will invest it for six years at 7.2 percent per year. How much will you have in nine years? (hint: draw a timeline) Multiple Choice $18,696.19 $17,290.61 $13,788.43 $15,176.40 $16,611.93
You would like to establish a trust fund that would provide annual scholarships of $100,000 today and then grow at 2.0% forever (i.e. at time 1 there will be a $102,000 scholarship award). How much would you have to deposit today in one lump sum to achieve this goal if you can earn a guaranteed 7.0 percent rate of return? 2,140,000 2,355,556 1,945,455 2,650,000
Listen The Chan family would like to establish a bursary at Camosun College. The bursary will pay $2,000 to a deserving finance student each year. Assuming that the payments will never end and that the funds can earn j1=3.5%, how much will it take to establish the bursary? Assume that the payments are at the end of each year. Your Answer:
Deakin University wants to establish a trust fund that will provide a perpetual annual scholarship of $15 000. It can invest the money at 11% per annum compounding. How much do they need to invest? Select one: a. $136 363.64 b. $140 500.50 c. $125 506.35 d. $130 340.75
Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 10% annual interest rate, compounded quarterly, in order to have $30,000 in the fund at the end of 10 years? Question content area bottom Part 1 They should deposit $enter your response here. (Round up to the nearest cent.)
Jane wants to create a fund today that will provide her a 4% guaranteed compounded annual rate. She wants to withdraw $15,000 one year from now and $27,000 two years from now, after which the fund will be depleted. How much must she invest today to achieve this goal? Group of answer choices $42,400.00 $40,775.89 $41,912.43 $39,386.10