Your brother has been offered a project paying a $725 annuity due for the next 15...
- Your brother has been offered a project paying a $725 annuity due for the next 15 years. What is the maximum amount of money your brother should invest in this project if he has a 12.45 percent rate of return on the investment?
- $124.73
- $4,821.50
- $2,985.03
- $5,421.78
Homework Answers
Annual Payment = $725
Period = 15 years
Interest Rate = 12.45%
Payments are made at the beginning of each year
Present Value = $725 + $725/1.1245 + … + $725/1.1245^13 +
$725/1.1245^14
Present Value = $725 * 1.1245 * (1 - (1/1.1245)^15) / 0.1245
Present Value = $725 * 7.478317
Present Value = $5,421.78
So, your brother should invest $5,421.78 in this project
Add Answer to:
Your brother has been offered a project paying a $725 annuity
due for the next 15...
You have been offered a project paying $300 at the beginning of each year for the...
You have been offered a project paying $300 at the beginning of each year for the next 20 years. What is the maximum amount of money you would invest in this project if you expect 9 percent rate of return to your investment?
Your brother has offered to give you $ 140, starting next year, and after that growing...
Your brother has offered to give you $ 140, starting next year, and after that growing at 2.5 % per year for the next 20 years. You would like to calculate the value of this offer by calculating how much money you would need to deposit in a local bank so that the amount will generate the same cash flows as he is offering you. Your local bank will guarantee a 6.1 % annual interest rate so long as you...
Please solve using financial calculator only and show work. Thank you. 28. Your brother has asked you to help him with c...
Please solve using financial calculator only and show work. Thank you. 28. Your brother has asked you to help him with choosing an investment. He has $5,200 to invest today for a period of five years. You identify a bank CD that pays an interest rate of 3.60 percent with the interest being paid quarterly. What will be the value of the investment in five years? 29. Tim has loaned money to his brother at an interest rate of 6...
10. Present value: Maria Addai has been offered a future payment $750 of compounded annually, on...
10. Present value: Maria Addai has been offered a future payment $750 of compounded annually, on her investment, what should she pay for this investment today? two years from now. If she can earn 6.5 percent, 11. Present value: Your brother has asked you for a loan and has promised to pay you$7,750 at the end of three years. If you normally invest to earn 6 percent per year, how much will you be willing to lend to your brother...
A young graduate has been offered a time-share on a condo in Steamboat Springs, Colorado. To...
A young graduate has been offered a time-share on a condo in Steamboat Springs, Colorado. To be a part owner, the graduate must pay $1,941.00 at the end of each year for the next 17.00 years. If the graduate’s discount rate is 5.00%, what is the cost of this opportunity in today’s dollars? In other words, what is the most the graduate should be willing to pay today instead of making payments? A project generates a cash flow of $497,400.00...
A perpetuity-due paying 5 every year has a present value of 90. An annuity-immediate paying 10...
A perpetuity-due paying 5 every year has a present value of 90. An annuity-immediate paying 10 monthly for 5 years has the same effective rate of interest what is the present value of this annuity? Hint: To calculate the monthly annuity, you should find the present value of a 60 payment annuity using the monthly effective rate of interest that is equivalent to to the annual effective rate of interest that you derived from the perpetuity. That is find i...
6.9. Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at...
6.9. Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 11.4 percent. How much money will Robert have at the end of seven years? 6.12 Computing annuity payment: Kevin Winthrop is saving for an Australian vacation in three years. He estimates that he will need $5,000 to cover his airfare and all...
New Jersey Mutual has offered you a single premium annuity that will pay you $12,000 per...
New Jersey Mutual has offered you a single premium annuity that will pay you $12,000 per year (end of year) for the next 15 years. If you must pay $109,296 today for this annuity, what is your expected rate of return? Please show work
Your brother wants to borrow $9,500 from you. He has offered to pay you back $12,750...
Your brother wants to borrow $9,500 from you. He has offered to pay you back $12,750 in a year. If the cost of capital of this investment opportunity is 10%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. If the cost of capital of this investment opportunity is 10%, what is its NPV? The NPV...
You have a savings account that earns 5% Interest, compounded annually. A friend has offered you...
You have a savings account that earns 5% Interest, compounded annually. A friend has offered you an investment opportunity, he says that if you invest In his new business, he will pay you $34,000 a year for the next five years. What is the maximum amount you would be willing to invest in your friend's business? (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor from the PV...
10. Present value: Maria Addai has been offered a future payment $750 of compounded annually, on her investment, what should she pay for this investment today? two years from now. If she can earn 6.5 percent, 11. Present value: Your brother has asked you for a loan and has promised to pay you$7,750 at the end of three years. If you normally invest to earn 6 percent per year, how much will you be willing to lend to your brother...
6.9. Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 11.4 percent. How much money will Robert have at the end of seven years? 6.12 Computing annuity payment: Kevin Winthrop is saving for an Australian vacation in three years. He estimates that he will need $5,000 to cover his airfare and all...
You have a savings account that earns 5% Interest, compounded annually. A friend has offered you an investment opportunity, he says that if you invest In his new business, he will pay you $34,000 a year for the next five years. What is the maximum amount you would be willing to invest in your friend's business? (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor from the PV...
Most questions answered within 3 hours.
-
A
circular loop in the plane of a paper lies inca0.65 T magnetic
field pointing into...
asked 12 minutes ago -
A business owner is trying to decide whether to buy, rent, or
lease office space and...
asked 12 minutes ago -
Thermal Storage Solar heating of a house is much more efficient
if there is a way...
asked 29 minutes ago -
Considering the “fits” for group and job design dimensions,
suppose you had 12 employees with different...
asked 37 minutes ago -
Consider TCP connection management.
How many segments are typically involved in the TCP connection
establishment? What...
asked 47 minutes ago -
1. You placed a stop-loss order to sell 500 shares of AAPL with
a stop price...
asked 55 minutes ago -
Sylva Warehousing desired to locate a central warehouse to serve
five North Carolina markets. Placed on...
asked 57 minutes ago -
A regression was run to determine if there is a relationship
between hours of TV watched...
asked 1 hour ago -
The theoretical yield of a reaction is the amount of product
obtained if the limiting reactant...
asked 1 hour ago -
You are an intern at a leading investment bank. Your manager
assigned you a project to...
asked 1 hour ago -
Please explain how to determine polarity for me.
Rank the following covalent bonds by decreasing
polarity....
asked 1 hour ago -
1. Express the confidence interval 86.5%±4.6% in interval
form
2. Assume that a sample is used...
asked 1 hour ago