Homework Answers
a. Present value = PVAF @ 10% of 8 years * Annual payment to be received = 5.335 * $10,000 = $53,350
b. The answer is No
Reason : We should not accept this offer as the amount that we are getting now ( i.e. $52,000 ) from the company is less from the present value of all the future payments ( i.e. $53,350 )
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Problem 1-11 (LO1.3) A financial company that advertises on television will pay you $52,000 now for...
A financial company that advertises on television will pay you $52,000 now for annual payments of...
A financial company that advertises on television will pay you $52,000 now for annual payments of $10,000 that you are expected to receive for a legal settlement over the next 8 years. Use Exhibit 1-D a. What is the present value of the annual payments if you estimate the time value of money at 10 percent? (Round your PVA factor to 3 decimal places and final answer to the nearest whole dollar.) Present value b. Should you accept this offer?...
A financial company advertises on television that they wll pay you $65,000 now in exchange for...
A financial company advertises on television that they wll pay you $65,000 now in exchange for annual payments of $9,000 that you are expected to receive for a legal settlement over the next 15 years. You estimate the time value of money at 11 percent. (a) Calculate the present value of the annual payments. Use Exhibit D (Round sime value factor to 3 declmal places and final answer to the nearest whole number) (b) Would you accept this offer? o...
11. A financial company that advertises on television will pay you $60,000 now for annual payments...
11. A financial company that advertises on television will pay you $60,000 now for annual payments of $10,000 that you are expected to receive for a legal settlement over the next 10 years. If you estimate the time value of money at 10 percent, would you accept this offer?
33.33 A financial company advertises on television that they will pay you $75,000 now in exchange...
33.33 A financial company advertises on television that they will pay you $75,000 now in exchange for annual payments of $12,500 that you are expected to receive for a legal settlement over the next 12 years. You estimate the time value of money at 10 percent. Would you except this offer? 33.32 If a person spends $15 a week on coffee (assume $750 a year), what would be the future value of that amount over 9 years if the funds...
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You win the lottery! Do you wish to receive $2,000,000 in one payment now, or $167,000...
You win the lottery! Do you wish to receive $2,000,000 in one
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On January 1 of this year, Shannon Company completed the following transactions (assume a 8% annual...
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George Penny will receive $32,250 for the next 10 years as a payment for a slogan he coined. Currently a 6 percent discount rate is appropriate. Use Appendix D. (Round "PV Factor" to 3 decimal places. Round the final answers to the nearest whole dollar.) a-1. Calculate the present value. Present value $ a-2. Should he be willing to sell his future rights now for $240,000? Yes No b-1. Calculate the present value if the payments will be made at...
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A financial company that advertises on television will pay you $52,000 now for annual payments of $10,000 that you are expected to receive for a legal settlement over the next 8 years. Use Exhibit 1-D a. What is the present value of the annual payments if you estimate the time value of money at 10 percent? (Round your PVA factor to 3 decimal places and final answer to the nearest whole dollar.) Present value b. Should you accept this offer?...
A financial company advertises on television that they wll pay you $65,000 now in exchange for annual payments of $9,000 that you are expected to receive for a legal settlement over the next 15 years. You estimate the time value of money at 11 percent. (a) Calculate the present value of the annual payments. Use Exhibit D (Round sime value factor to 3 declmal places and final answer to the nearest whole number) (b) Would you accept this offer? o...
An investment will pay $20,200 at the end of the first year, $30,200 at the end of the second year, and $50,200 at the end of the third year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) Determine the present value of this investment using a 8% annual interest rate. (Round your answer to nearest whole dollar.) Present value of investment We were unable to transcribe this...
You win the lottery! Do you wish to receive $2,000,000 in one
payment now, or $167,000 per year for 30 years? To help you in your
decision, estimate the present value of the second option assuming
constant annual interest rates of 6%, 8%, and 10%. Expound on your
decision within a text box. (You may use the built-in PV function
within Excel)
Loans: where: and, interest due at the end of each month A = payment P = principal (amount...
The Jenkins Corporation has purchased an executive jet. The company has agreed to pay $201,300 per year for the next 10 years and an additional $2.013,000 at the end of the 10th year. The seller of the jet is charging 7% annual interest. (FV of St. PV of SLEVA of St and PVA of 51) (Use the appropriate factor(s) from the tables provided.) Determine the liability that would be recorded by Jenkins. (Round your answer to the nearest whole dollar)...
On January 1 of this year, Shannon Company completed the following transactions (assume a 8% annual interest rate): (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) 1. Bought a delivery truck and agreed to pay $61,400 at the end of three years. 2. Rented an office building and was given the option of paying $11,400 at the end of each of the next three years or paying...
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