Answered: 2. Your grandfather placed $5,000 in a…

2. Your grandfather placed $5,000 in a trust fund for you. In 12 years what will be the worth of the savings. If the estimated rate of return on the trust fund is 8%?+

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 10E

See similar textbooks

Related questions

Q: pay-off of 2100 in three years. Now, which project should you choose when discount rates is zero, 5%…

A: Net Present Value: It represents the present worth in absolute terms for a project. It is computed…

Q: Year-to-date, Oracle had earned a −1.34% return. During the same time period, Valero Energy earned…

A: Return of portfolio can be determined by calculating the return of individual stock with respective…

Q: Consider the following price and dividend data for GS Company: Date Price (S)Dividend (S) December…

A: Solution:- Realised annual return means the annual percentage rate of return earned by holding a…

Q: Explain why Fannie Mae and Freddie Mac are an example of moral hazard and based on that critically…

A: Fannie Mae and also Freddie Mac are defined as the moral hazard, which are backed by the home…

Q: a) How much is the loan amount going to be? b) What will your monthly payments be? c) How much total…

A: Loan Payments: These are payments comprising interest & principal amounts. Such payments are…

Q: If we do not want to make monthly car payments over $450, up to what amount can I borrow today if r…

A: The time value of money is used to determine the present value of fixed amount paid at a fixed…

Q: The Darlington Equipment Company purchased a machine 5 years ago at a cost of $85,000. The machine…

A: NPV NPV is a capital budgeting tool to decide on the capital project whether it should be accepted…

Q: 1. Which of the following statements is FALSE? A) When an investment is risky, there are different…

A: A) If investment is risky then it results into different amount of returns depending upon the risk.…

Q: The price of the stock will be $. (Round to the nearest cent.)

A: Stock Price: It refers to the current value of the stock to the buyers and sellers. Thus, it is…

Q: (Expected rate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year…

A: As per Bartleby honor code, the expert is required only to solve that part, which is explicitly…

Q: What effective annual rate (EAR) are they charging us on the loan?

A: Effective Annual Rate: It refers to the true annual rate on a loan/credit or on investment since it…

Q: Suppose that National Waferonics has before it a proposal for a four-year financial lease.…

A: Calculation of after discount rate: After-tax discount rate = 14(1-21%) = 11.06%

Q: Company BSM has total assets with a market value of $100 million financed by debt and equity. The…

A: The volatility: The volatility is a measure of risk. An increase in volatility implies an increase…

Q: ity (1000 kg product per year) has an d variable costs are 61 per cent of ne it (ie, profit per kg…

A: Break even point = Fixed cost / Contribution margin

Q: You are the finance manager for Olympia Industries. The company plans to purchase $1,000,000 in new…

A: Future Value = $1,000,000 Time Period = 5 Years Interest Rate = 6% Compounded semi-annual Inflation…

Q: You have just taken out a $24,000car loan with a 4%APR, compounded monthly. The loan is for five…

A: Present value of annuity Annuity is a series of equal payment at equal interval over a specified…

Q: You have the following information regarding an annual bond. What is the modified duration of this…

A: Modified duration of a bond shows the change in the value of the security as the value of the…

Q: 5. Which of the following technique is used to disclose a firm's's financial performance and…

A: A firm has to disclose its financial performance and financial position as is required by law. This…

Q: -$29 -$27 -$29 -$27 Tours choose, and why? is that should he chosen -$29 -$27 -$ hosen and the final…

A: NPV= Present value of cashinflows - Present value of cashoutflows.

Q: 16. The stock is currently trading at $32 per share. Consider a put option on this stock with a…

A: The market price of share = $32 The strike price of a share = $30

Q: If the assumption that companies pay no tax in Modigliani & Miller Proposition is relaxed, while the…

A: Modigliani & Miller Propositions are an economic theory that state that the value of the firm is…

Q: percent-of-sales method to preparing a pro forma income statement

A: A weakness of the per cent-of-sales method in preparing a pro forma income statement is First, the…

Q: If P44,873 is deposited each year for 6 years at an interest rate of 14.225% compounded semi…

A: Here we will use the concept of time value of money. The concept of time value of money states that…

Q: is this statement true or false? and why? Requiring a relative short pay-back period for projects…

A: In this question, we would evaluate whether the below statement stands True or False. Requiring a…

Q: Ques1) Calculate earnings per share for the debt and equity financing options at the expected…

A: Earnings per shares refers to the profit earned by each shareholder after paying all the expenses of…

Q: is this statement true or false? and explanation to why in as much detail as possible? An agile…

A: Current Asset-Those items which can be convertible in monetary units in year 1 are called current…

Q: revenues of $2 million per year. Next year, based upon a decision on a long-term government…

A: Revenues of Plant = $2 Million If a government contract awarded then sales increase by 20% If a…

Q: After considering a number of investment opportunities, you have decided that you should be able to…

A: Nominal interest rate : The nominal interest rate (or money interest rate) is the percentage…

Q: The New York Soccer Association would like to accumulate R10,000 by the end of 4 years from now to…

A: Solution:- When an amount is invested somewhere, it earns interest on it. The amount deposited is…

Q: One method for developing a mine containing an estimated 100,000 tons of ore will result in the…

A: The profit maximization is one of the methods of finding the best alternatives in a projects as a…

Q: CAPM The Treasury bill rate is 4%, and the expected return on the market portfolio is 12%. Using the…

A: Because you have asked question with multiple parts (MULTI PART) , we will solve the first 3 parts…

Q: Info Systems Technology (IST) manufactures microprocessor chips for use in appliances and other…

A: Given: Particulars Amount Shares outstanding 50 Share price 15.75 13.75 Possibilities…

Q: Suppose you manage an equity fund with the following securities. A client invests partially in your…

A: The expected return and the standard deviation of the portfolio: The expected return of a portfolio…

Q: Finance The US and Australia operate floating exchange regimes, and they trade with each other.…

A: Cash rate-is the interest rate that a central bank of a country like Reserve Bank of Australia will…

Q: What constant annual payment is this equivalent to if the annual rate is 10%?

A: Equivalent Annual Payment: It computes the constant annual cash flow produced by a project over its…

Q: You are evaluating a project that will cost $502,000, but is expected to produce cash flows of…

A: 1. Pay back period is the length of time required to recover the cost of Investment. It is…

Q: PROVIDE - PRESENT VALUE, FUTURE VALUE, AND internal rate of return (IRR)

A: Present and Future Value: The current value of a cash flow that is expected to occur at some time in…

Q: Using the information in the table below, answer calculate the following: Which company…

A: Interest Coverage Ratio:- This ratio also known as “times interest earned ratio” indicates the…

Q: What is the present value of a regular $1,000 60-month annuity, if r is 6% APR compounded monthly?

A: Present Value of Ordinary Annuity refers to the concept which gives out the discounted or today's…

Q: ______ ratios are used to measure the speed in which various assets are converted into sales or cash

A: A firm can convert its assets into cash. Those assets that can be converted into cash within a short…

Q: What is the present value of an investment with the following cash flows? Year 1 $14,000 Year 2…

A: Solution:- Present value means the value in today’s terms after discounting the future cash flows to…

Q: Period Project Cash Flows n A B D 0 -$6,000 -$2,500 $4,800 -$4,100 1 $5,800 -$4,400 -$6,000 $1,000 2…

A: Net Present Value : It is the difference between the present value of all cash inflows and cash…

Q: Marshall’s Clothing Company has total assets of $90 million, ROA of 24%, ROE of 21% and a net profit…

A: Given, Total assets $90 million ROA is 24% Net profit margin is 12%

Q: When computing an interest or growth rate, the rate will increase the smaller the future value,…

A: The statement is False.

Q: The Price Company will produce 55,000 widgets next year. Variable costs will equal 40 percent of…

A: Solution:- Earnings before interest and taxes (EBIT) means the operating income of an entity before…

Q: What is forward points?

A: Forward points are nothing but basis points added or subtracted from the spot rate of an underlying…

Q: I don't understand when you say that the call option or short option will go in the direction of…

A: Hedging with forex is a method for protecting a currency pair's position against a negative move and…

Q: A man takes on a loan of $135,000. The loan is being repaid annually by a 10-year increasing…

A: Present value = Future value ×1(1+ interest rate)time Interest = outstanding amount * interest rate…

Q: Suppose Autodesk stock has a beta of 2.17, whereas Costco stock has a beta of 0.71. If the…

A: Autodesk beta = 2.17 Costco beta = 0.71 Risk free rate = 6% Market return = 11.5% Autodesk weight =…

Q: Calculate the term of each annuity: Future Value Present Value Size of Payment a. $0 $8,500 $675 b.…

A: Future Value Present Value Size of Payment Interest Rate Payment and Conversion Period a $…

Concept explainers

Reasons for Estate Planning

Planning is a process that helps decide in advance about future activities and operations. Planning helps to draft the procedures by identifying, analyzing, and designing how to work, when to work, by whom should be done, and what has to be done. It is the primary step followed by a person, business organizations, institutions, companies, etc.

Question

2. Your grandfather placed $5,000 in a trust fund for you. In 12 years what will be the worth
of the savings. If the estimated rate of return on the trust fund is 8%?+

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

Trending now

This is a popular solution!

Step by step

Solved in 2 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

Your grandfather placed $5,000 in a trust fund for you. In 12 years what will be the worth of the savings. If the estimated rate of return on the trust fund is 8%?
Your godmother put $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. What is the rate of return on the trust fund?
Your grandfather placed $5,000 in a trust fund for you. In 12 years, the fund will be worth $9,500. What is the rate of return on the trust fund (compounded annually)?
Your brother, who is 6 years old just received a trust fund that will be worth $25,000 when he is 21 years old. If the fund earns 0.11 interest compounded annually, what is the value of the fund today? Round to two decimal places.
You need $4,000 to buy a new baking oven for your business in 4 years. What value you must have now if the compounded annually return is 12%. Your parents placed $240,000 in a trust fund for you. In 15 years, what will be the worth of the savings. If the estimated rate of return on the trust fund is 10%?
Angela has a trust fund that will mature in three years with a value of $15,000. If this trust fund is earning a 5% rate of return annually, what is the value of this trust fund in today’s dollars (i.e., the trust fund’s present value)?
Your rich uncle has offered you two living trust payouts for the rest of yourlife. The positive cash flows of each trust are shown below. If your personalMARR is 10% per year, which trust should you select? Note: At 10% per year interest, infinity occurs when N = 80 years.
A 1,000,000-trust fund was set up and to be used by an 8-year old nephew when he goes to college. In 8 years, how much will the fund be if the investment rate is 7.5% compounded quarterly?
Josh is receiving 25,000.00 pesos from his grandfather yearly and has decided to invest it next year to a fund manager with an average 12% rate of return per year. a. How much will Josh received in 7th year if he plans to add 5,000.00 pesos per year on the succeeding years?b. How much rate should he add in his yearly savings to have 200,000.00 pesos in the 5th year?
If your trust fund promises to pay you $25, 000 on your 24th birthday (6years from today) and earns 9% compounded annually, then what is the trust fund's present value?
(Use Calculator or Formula Approach) Your parents set up a trust fund for you 10 years ago that is now worth $19,671.51. If the fund earned 7% per year, how much did your parents invest?
This is a personal finance question: If Pete has $1,000 and invests it into a mutual fund that returns 10%, what will be his Future Value in 3 years if the investment compounds annually?