Gina Vitale has just contracted to sell a small parcel of land that she inherited a...
Gina Vitale has just contracted to sell a small parcel of land that she inherited a few years ago. The buyer is willing to pay
$28,492
now, or the buyer will make a series of payments starting now and continuing at annual intervals shown in the following table,
|
Mixed Stream |
|
|
Beginning of year |
Cash Flow |
|
0 |
$8,000 |
|
1 |
$6,000 |
|
2 |
$10,000 |
|
3 |
$3,000 |
|
4 |
$9,000 |
. Because Gina doesn't really need the money today, she plans to let it accumulate in an account that earns
9%
annual interest. Given her desire to buy a house five years after selling the lot, she decides to choose the payment
alternative either
the lump sum or the mixed
stream that
provides the higher future value at the end of 5 years. Which alternative will she choose?
The future value,
FV Subscript nFVn,
of the lump sum deposit is
$.
(Round to the nearest cent.)The future value of the mixed stream of payments is
$
(Round to the nearest cent.)
Which alternative will Gina choose? (Select the best answer below.)
1.Mixed Stream of Payments
2.Lump sum deposit
Homework Answers
Add Answer to:
Gina Vitale has just contracted to sell a small parcel of land
that she inherited a...
A construction company has for sale a heavy duty drilling machine. The company has found a...
A construction company has for sale a heavy duty drilling machine. The company has found a buyer willing to pay either R50 000 now or a series of cash flow shown in the Table below: Year Payment 1 R8 000 R9 000 3 R12 000 R16 000 R20 000 The company plans to invest any received payments in an account that earns 10% annual interest. The company intends to buy a more sophisticated drilling machine in 5 years from now...
2. Gabrielle just won $1.8 million in the state lottery. She is given the option of...
2. Gabrielle just won $1.8 million in the state lottery. She is given the option of receiving a total of S900,000 now, or she can elect to be paid $90,000 at the end of each of the next 20 years. If Gabrielle can earn 6% annually on her investments, from a strict economic point of view which option should she take? If Gabrielle takes the prize as an annuity, the present value of the 20-year ordinary annuity is S Round...
Karen has won $50,000 from a lawsuit. The money will be paid out in 8 equal-sized annual payments (payments are made a...
Karen has won $50,000 from a lawsuit. The money will be paid out in 8 equal-sized annual payments (payments are made at the end of each year). If Karen invests each payment in an account that earns 4.6% interest, compounded annually, how much will she have at the end of 8 years? Preview After Karen wins her lawsuit, she is approached by a structured settlement company. They offer her $48,500, paid immediately, in return for her annual lawsuit payments. How...
The following table describes the characteristics of five annuities: E. Calculate the future value of each...
The following table describes the characteristics of five annuities: E. Calculate the future value of each annuity given its characteristics. The future value, FV, on the annuity at the end of the deposit period for Deposit A is $ . (Round to the nearest cent.) i Data Table 4% Annual Annuity Interest Annuity Deposit Payment Rate Length (yr) $2,200 $800 6% $1,300 8% $12,400 9% $4,100 15% (Click on the icon located on the top-right corner of the data table...
Assume that you inherited some money. A friend of yours is working as an unpaid intern...
Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of $50 (1 payment at the end of each of the next 4 years) plus an extra payment of $1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of $900 each. Your money is now invested...
Problem 4-7 Present and Future Value of an Uneven Cash Flow Stream An investment will pay...
Problem 4-7 Present and Future Value of an Uneven Cash Flow Stream An investment will pay $100 at the end of each of the next 3 years, $400 at the end of Year 4, $500 at the end of Year 5, and $700 at the end of Year 6. If other investments of equal risk earn 8% annually, what is its present value? Round your answer to the nearest cent What is its future value? Round your answer to the...
PV and Effective Annual Rate Assume that you inherited some money. A friend of yours is...
PV and Effective Annual Rate Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of 570 (1 payment at the end of each of the next 4 years) plus an extra payment of $1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of $950 each....
Check my work Assume that you are about to sell property (a vacant parcel of real...
Check my work Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales- commission selling price for the property is $480,000. You are willing to finance this transaction over a 22-year period and have told the buyer that you expect a 14% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. 0.25 points Required: 1. What will be...
Assume that you are about to sell property (a vacant parcel of real estate) you own...
Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales- commission selling price for the property is $440,000. You are willing to finance this transaction over a 20-year period and have told the buyer that you expect a 10% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. Required: 1. What will be your periodic cash receipt, to...
Assume that you are about to sell property la vacant parcel of real estate) you own...
Assume that you are about to sell property la vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales commission selling price for the property is $480,000. You are willing to finance this transaction over a 17-year period and have told the buyer that you expect a 10% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. Required: 1. What will be your periodic cash receipt, to...
A construction company has for sale a heavy duty drilling machine. The company has found a buyer willing to pay either R50 000 now or a series of cash flow shown in the Table below: Year Payment 1 R8 000 R9 000 3 R12 000 R16 000 R20 000 The company plans to invest any received payments in an account that earns 10% annual interest. The company intends to buy a more sophisticated drilling machine in 5 years from now...
2. Gabrielle just won $1.8 million in the state lottery. She is given the option of receiving a total of S900,000 now, or she can elect to be paid $90,000 at the end of each of the next 20 years. If Gabrielle can earn 6% annually on her investments, from a strict economic point of view which option should she take? If Gabrielle takes the prize as an annuity, the present value of the 20-year ordinary annuity is S Round...
Karen has won $50,000 from a lawsuit. The money will be paid out in 8 equal-sized annual payments (payments are made at the end of each year). If Karen invests each payment in an account that earns 4.6% interest, compounded annually, how much will she have at the end of 8 years? Preview After Karen wins her lawsuit, she is approached by a structured settlement company. They offer her $48,500, paid immediately, in return for her annual lawsuit payments. How...
The following table describes the characteristics of five annuities: E. Calculate the future value of each annuity given its characteristics. The future value, FV, on the annuity at the end of the deposit period for Deposit A is $ . (Round to the nearest cent.) i Data Table 4% Annual Annuity Interest Annuity Deposit Payment Rate Length (yr) $2,200 $800 6% $1,300 8% $12,400 9% $4,100 15% (Click on the icon located on the top-right corner of the data table...
Problem 4-7 Present and Future Value of an Uneven Cash Flow Stream An investment will pay $100 at the end of each of the next 3 years, $400 at the end of Year 4, $500 at the end of Year 5, and $700 at the end of Year 6. If other investments of equal risk earn 8% annually, what is its present value? Round your answer to the nearest cent What is its future value? Round your answer to the...
PV and Effective Annual Rate Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of 570 (1 payment at the end of each of the next 4 years) plus an extra payment of $1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of $950 each....
Check my work Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales- commission selling price for the property is $480,000. You are willing to finance this transaction over a 22-year period and have told the buyer that you expect a 14% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. 0.25 points Required: 1. What will be...
Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales- commission selling price for the property is $440,000. You are willing to finance this transaction over a 20-year period and have told the buyer that you expect a 10% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. Required: 1. What will be your periodic cash receipt, to...
Assume that you are about to sell property la vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales commission selling price for the property is $480,000. You are willing to finance this transaction over a 17-year period and have told the buyer that you expect a 10% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. Required: 1. What will be your periodic cash receipt, to...
Most questions answered within 3 hours.
-
A manufacturer of chocolate chips would like to know whether its
bag filling machine works correctly...
asked 18 seconds from now -
when released from rest at point A, an unknown ion moves to
point B. At point...
asked 1 minute from now -
A stock is expected to pay the following dividends: $1.1
four years from now, $1.4 five...
asked 4 minutes ago -
Consider the student registration business process at
your college:
1.)Describe the steps necessary for you to...
asked 6 minutes ago -
G=yellow and g=green pea seeds. You cross a heterozygous
yellow-seeded plant with a green-seeded plant to...
asked 6 minutes ago -
Current Balance Experiment
a) When there is no current flowing through the electromagnet
coil, is there...
asked 5 minutes ago -
In Visual Basic 2017, Write a complete Main method that prints
Hello, world to the screen....
asked 21 minutes ago -
a) Find the pressure difference on an airplane wing if air flows
over the upper surface...
asked 27 minutes ago -
Write an assessment of the current business analysis of Hilton
Worldwide using Porters 5 Forces analysis.
asked 38 minutes ago -
i need help on this
Chapter 9 Section 3 Question 1:
Rudy puts this poster, with...
asked 47 minutes ago -
True or false Assembly x86
41. _____ The program counter is a pointer to the
instruction....
asked 47 minutes ago -
You have conducted an experiment to try to demonstrate that
growth factor receptor X protein (GFRX)...
asked 1 hour ago