If I asked you to give me $100 today and promised to pay you $100 back...
Homework Answers
I wouldn't agree on the offer to give $100 today and receive back $100 after 1 year. The reason is because $100 today is not the same value after 1 year. The time value of money kees changing over a period of time. We can earn interest on this $100 within this 1 year.
The prevailing interest rate in the market should be offered along with the $100 on return after 1 year to avail the offer. Otherwise the lender suffers the loss and the borrower gains out of it.
Ex: Assuming that the interest rate is 2% p.a. $102 should be returned back along with $2 as interest for the $100 principle amount.
Interest = 2% * 100 = $2
Add Answer to:
If
I asked you to give me $100 today and promised to pay you $100 back...
Your grandmother promised to give you $100 today and $100 a year from now, 2 years...
Your grandmother promised to give you $100 today and $100 a year from now, 2 years from now, 3 years from now, 4 years from now, and 5 years from now. Given that the current interest rate is 3% compounded annually, what is the present value of this stream of cash flows?
You are offered the following deal: if you give me $1200 today, I will provide you...
You are offered the following deal: if you give me $1200 today, I will provide you with a 40-year annuity that grows at 5% per year. Each payment is received at the end of each year and the first payment (one year from now) is equal to $100. The appropriate interest rate for an investment of this risk is 15%. What is the PV of this stream of cash flows and should you accept the offer? A. PV is approximately...
Exercise 3.11 You brother has asked you for a loan and has promised to pay back...
Exercise 3.11 You brother has asked you for a loan and has promised to pay back $7,000 at the end of three years. If you normally invest to earn 8 percent per annum, how much will you be willing to lend to your brother? (Do not enter the $ sign in your answer, if you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest cent.)
Your brother has asked you for a loan and has promised to pay you $6000 at...
Your brother has asked you for a loan and has promised to pay
you $6000 at the end of three years. If you normally earn 7.5% per
year, how much will you be willing to lend your brother if you view
this purely as a financial transaction(If you don’t give your
brother a special deal)? (Round to nearest penny) amount to be
invested today:
xT Your answer is incorrect. Try again Your brother has asked you for alan and has...
Problem 5.11 Your brother has asked you for a loan and has promised to pay you...
Problem 5.11 Your brother has asked you for a loan and has promised to pay you $5,450 at the end of three years. If you normally invest to earn 7.60 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don't give your brother a special deal)? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round...
Your brother has asked you for a loan and has promised to pay you $8,600 at...
Your brother has asked you for a loan and has promised to pay you $8,600 at the end of three years. If you normally invest to earn 7.70 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don’t give your brother a special deal)? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final...
A rich aunt has promised you $6,000 one year from today. In addition, each year after...
A rich aunt has promised you $6,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversary of the last payment) that is 3% larger than the last payment. She will continue to show this generosity for 20 years, g ng a total of 20 payments if the interest rate is 7%, what is her promise worth today? The present value of the aunt's promise is $(Round to the nearest dollar.)
A rich aunt has promised you $2,000 one year from today. In addition, each year after...
A rich aunt has promised you $2,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversarydof the last payment) that is 3% larger than the last payment. She will continue to show this generosity for 20 years, giving a total of 20 payments. If the interest rate is 4%, what is her promise worth today? The present value of the aunt's promise is (Round to the nearest dollar.) P 4-34...
A rich aunt has promised you $5,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversary of the last payment) that is 7% larger than the last payment. She will continue to show this generosity for
A rich aunt has promised you $5,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversary of the last payment) that is 7% larger than the last payment. She will continue to show this generosity for 20 years, giving a total of 20 payments. If the interest rate is 7%, what is her promise worth today?
Suppose you have a real estate opportunity that requires $100,000 investment today but will pay you...
Suppose you have a real estate opportunity that requires $100,000 investment today but will pay you $250,000 in 8 years. What interest rate, r, would you need so that the present value of what you get is equal to the present value of what you give up? a.) 10.135% b) 11.135% c) 12.135% d) 9.135% please show work on how you answered each!
Your brother has asked you for a loan and has promised to pay
you $6000 at the end of three years. If you normally earn 7.5% per
year, how much will you be willing to lend your brother if you view
this purely as a financial transaction(If you don’t give your
brother a special deal)? (Round to nearest penny) amount to be
invested today:
xT Your answer is incorrect. Try again Your brother has asked you for alan and has...
Problem 5.11 Your brother has asked you for a loan and has promised to pay you $5,450 at the end of three years. If you normally invest to earn 7.60 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don't give your brother a special deal)? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round...
A rich aunt has promised you $6,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversary of the last payment) that is 3% larger than the last payment. She will continue to show this generosity for 20 years, g ng a total of 20 payments if the interest rate is 7%, what is her promise worth today? The present value of the aunt's promise is $(Round to the nearest dollar.)
A rich aunt has promised you $2,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversarydof the last payment) that is 3% larger than the last payment. She will continue to show this generosity for 20 years, giving a total of 20 payments. If the interest rate is 4%, what is her promise worth today? The present value of the aunt's promise is (Round to the nearest dollar.) P 4-34...
Most questions answered within 3 hours.
-
The average length of time between arrivals at a turnpike
toll-booth is 26 seconds. What is...
asked 48 minutes ago -
(a) A piston at 6.1 atm contains a gas that occupies a volume of
3.5 L....
asked 2 hours ago -
Please answer true or false. Words
cannot be changed or added in to make it true...
asked 2 hours ago -
An empty test tube weighs 15.923 grams. Then,
MgCl2•6H2O is added into the test tube. After...
asked 2 hours ago -
Assume memory access is 10 units of time and disk access is
10000 units of time....
asked 2 hours ago -
1. Are all good samples random?
2. Magazines often report surveys giving statistics such as “63%...
asked 2 hours ago -
Under all the various types of market structures, firms
must eventually earn some economic profits for...
asked 2 hours ago -
Consider the following fitness regime for a single locus trait
with two co-dominant alleles: w11 =...
asked 2 hours ago -
A large cable company reports the following.
80% of its customers subscribe to its cable TV...
asked 2 hours ago -
Please answer the question in brief.
Discuss the role of ERP in organizations. Are ERP tools...
asked 2 hours ago -
Discuss the pros and cons of collaborative software such
as SameTime. Does it increase productivity? What...
asked 2 hours ago -
Buying your in-laws a gift because it’s expected is
due to the ____________ motive of gift-giving....
asked 2 hours ago