FUND. OF CORPORATE FINANCE (LL)
11th Edition
ISBN: 9781260377811
Author: Ross
Publisher: MCG
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Chapter 6, Problem 16QP
Summary Introduction
To calculate: The
Introduction:
The future value of cash flow is the accumulated value including interest after a specified period. It is utilized to take effective decision at present or to assess the investment potentiality.
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Students have asked these similar questions
2. Find the future value of OMR10,000 invested now after five years if the annual interest rate is 8 percent.
a. What would be the future value if the interest rate is a simple interest rate?
b. What would be the future value if the interest rate is a compound interest rate?
5) What is the present value (PV) of $50,000 received twenty years from now, assuming the interest rate is 6% per year?A) $32,500.00B) $13,251.70C) $15,590.24D) $27,282.92
10. Findingthe interest rate and the number of years
The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations.
If a security of $12,000 will be worth $14,292.19 three years in the future, assuming that no additional deposits or withdrawals are made, what is the implied interest rate the investor will earn on the security?
4.50%
4.80%
6.00%
7.20%
If an investment of $45,000 is earning an interest rate of 8.50% compounded annually, it will take for this investment to grow to a value of $79,656.40—assuming that no additional deposits or withdrawals are made during this time.
Which of the following statements is true, assuming that no additional deposits or withdrawals are made?
If you invest $5 today at 15% annual compound interest for 82.3753 years, you’ll end up with approximately $100,000.
If you invest $1 today at 15%…
Chapter 6 Solutions
FUND. OF CORPORATE FINANCE (LL)
Ch. 6.1 - Prob. 6.1ACQCh. 6.1 - Prob. 6.1BCQCh. 6.1 - Unless we are explicitly told otherwise, what do...Ch. 6.2 - In general, what is the present value of an...Ch. 6.2 - In general, what is the present value of a...Ch. 6.3 - If an interest rate is given as 12 percent...Ch. 6.3 - What is an APR? What is an EAR? Are they the same...Ch. 6.3 - Prob. 6.3CCQCh. 6.3 - What does continuous compounding mean?Ch. 6.4 - What is a pure discount loan? An interest-only...
Ch. 6.4 - What does it mean to amortize a loan?Ch. 6.4 - Prob. 6.4CCQCh. 6 - Two years ago, you opened an investment account...Ch. 6 - A stream of equal payments that occur at the...Ch. 6 - Your credit card charges interest of 1.2 percent...Ch. 6 - What type of loan is repaid in a single lump sum?Ch. 6 - Annuity Factors [LO1] There are four pieces to an...Ch. 6 - Prob. 2CRCTCh. 6 - Prob. 3CRCTCh. 6 - Present Value [LO1] What do you think about the...Ch. 6 - Prob. 5CRCTCh. 6 - Prob. 6CRCTCh. 6 - APR and EAR [LO4] Should lending laws be changed...Ch. 6 - Prob. 8CRCTCh. 6 - Prob. 9CRCTCh. 6 - Prob. 10CRCTCh. 6 - Prob. 11CRCTCh. 6 - Prob. 12CRCTCh. 6 - Prob. 1QPCh. 6 - Prob. 2QPCh. 6 - Prob. 3QPCh. 6 - Prob. 4QPCh. 6 - Calculating Annuity Cash Flows [LO1] If you put up...Ch. 6 - Calculating Annuity Values [LO1] Your company will...Ch. 6 - Calculating Annuity Values [LO1] If you deposit...Ch. 6 - Calculating Annuity Values [LO1] You want to have...Ch. 6 - Prob. 9QPCh. 6 - Calculating Perpetuity Values [LO1] The Maybe Pay...Ch. 6 - Prob. 11QPCh. 6 - Prob. 12QPCh. 6 - Calculating APR [LO4] Find the APR, or stated...Ch. 6 - Calculating EAR [LO4] First National Bank charges...Ch. 6 - Prob. 15QPCh. 6 - Prob. 16QPCh. 6 - Prob. 17QPCh. 6 - Calculating Present Values [LO1] An investment...Ch. 6 - EAR versus APR [LO4] Big Doms Pawn Shop charges an...Ch. 6 - Prob. 20QPCh. 6 - Calculating Number of Periods [LO3] One of your...Ch. 6 - Calculating EAR [LO4] Friendlys Quick Loans, Inc.,...Ch. 6 - Prob. 23QPCh. 6 - Calculating Annuity Future Values [LO1] You are...Ch. 6 - Calculating Annuity Future Values [LO1] In the...Ch. 6 - Prob. 26QPCh. 6 - Prob. 27QPCh. 6 - Prob. 28QPCh. 6 - Simple Interest versus Compound Interest [LO4]...Ch. 6 - Prob. 30QPCh. 6 - Prob. 31QPCh. 6 - Prob. 32QPCh. 6 - Calculating Future Values [LO1] You have an...Ch. 6 - Calculating Annuity Payments [LO1] You want to be...Ch. 6 - Prob. 35QPCh. 6 - Prob. 36QPCh. 6 - Prob. 37QPCh. 6 - Growing Annuity [LO1] Your job pays you only once...Ch. 6 - Prob. 39QPCh. 6 - Calculating the Number of Payments [LO2] Youre...Ch. 6 - Prob. 41QPCh. 6 - Prob. 42QPCh. 6 - Prob. 43QPCh. 6 - Prob. 44QPCh. 6 - Prob. 45QPCh. 6 - Prob. 46QPCh. 6 - Prob. 47QPCh. 6 - Prob. 48QPCh. 6 - Prob. 49QPCh. 6 - Calculating Present Value of a Perpetuity [LO1]...Ch. 6 - Prob. 51QPCh. 6 - Prob. 52QPCh. 6 - Calculating Annuities Due [LO1] Suppose you are...Ch. 6 - Prob. 54QPCh. 6 - Prob. 55QPCh. 6 - Prob. 56QPCh. 6 - Prob. 57QPCh. 6 - Prob. 58QPCh. 6 - Prob. 59QPCh. 6 - Prob. 60QPCh. 6 - Calculating Annuity Values [LO1] You are serving...Ch. 6 - Prob. 62QPCh. 6 - Calculating EAR with Points [LO4] The interest...Ch. 6 - Prob. 64QPCh. 6 - Prob. 65QPCh. 6 - Prob. 66QPCh. 6 - Prob. 67QPCh. 6 - Calculating Annuity Payments [LO1] This is a...Ch. 6 - Prob. 69QPCh. 6 - Prob. 70QPCh. 6 - Prob. 71QPCh. 6 - Calculating Interest Rates [LO4] A financial...Ch. 6 - Prob. 73QPCh. 6 - Prob. 74QPCh. 6 - Ordinary Annuities and Annuities Due [LO1] As...Ch. 6 - Calculating Growing Annuities [LO1] You have 40...Ch. 6 - Prob. 77QPCh. 6 - Prob. 78QPCh. 6 - Prob. 79QPCh. 6 - Prob. 80QPCh. 6 - Prob. 1MCh. 6 - Prob. 2MCh. 6 - Prob. 3MCh. 6 - Prob. 4MCh. 6 - Prob. 5MCh. 6 - Prob. 6M
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Similar questions
- 4. You are planning to invest OMR 2,500 today for three years at a nominal interest rate of 9 percent with annual compounding. a) What would be the future value of your investment? b) Now assume that inflation is expected to be 3 percent per year over the same three-year period.What would be the investment’s future value in terms of purchasing power? c) What would be the investment’s future value in terms of purchasing power if inflation occurs at a 9 percent annual rate?arrow_forward3.12 Suppose the spot rates of interest for investment horizons of 1 to 5 years are 4%, and for 6 to 10 years are 5%. (b) Calculate the present value of an annuity-immediate of $100 over 10 years.arrow_forward3.12 Suppose the spot rates of interest for investment horizons of 1 to 5 years are 4%, and for 6 to 10 years are 5%. (c) Compute the future value of the annuity-immediate at the end of year 10, assuming future payments earn the forward rates of interest, using equation (3.18).arrow_forward
- 29. What will P247,000 grow to be in 9 years if it is invested today in an account with an annual interest rate of 11%?arrow_forwardIf you invest 5000 dollars today at a compound interest rate of 9 percent, what will be its future value after 30 years? (CVIF9,30 = 13.268)Select one:a. 66,340 dollars. b. 65,000 dollars.c. 18,500 dollars.d. 60,000 dollars.e. 1,350,000 dollarsarrow_forwardThe future amount of P100,000 for a period of 8 years is equal to P341,655.49, considering money is worth 10% per year with an inflation rate of x percent. Find the value of x.arrow_forward
- What is the future value (FV) of $20,000 in four years, assuming the interest rate is 4% per year? O $15,208.16 O$25,736.89 O $19,887.59 O $23,397.17arrow_forward2. Which of the following alternatives would you rather receive, assuming an interest rate of 8% per year? Alternative 1: Receive $100 today: Alternative 2: Receive $120 two years from nowarrow_forwardPlease solve it ASAP...Q. # 1 : What is the future value of $1000 in 10 years if the interest is compounded at 6% annually ?arrow_forward
- 1. At what annual interest rate will $1,200 invested today be worth $2.500 in 12 years?arrow_forwardN1 What is the value today of an investment that will pay $3,947.00 every six months for 27 years? Assume the first payment is made 5 years from today. The annualized interest rate is 9.00% p.a.arrow_forwardQuestion 8 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?arrow_forward
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