A painting is currently worth $100,000, and is expected to maintain its real value for three...
A painting is currently worth $100,000, and is
expected to maintain its real value for three years.
The real interest rate is expected to remain constant at 10%. What
is the present value of the painting's expected price at the end of
the third year?
Answer: $88,899
CAN YOU EXPLAIN HOW TO DO IT STEP BY STEP.
HOW DID YOU GET THE ANSWER 88,899????
PLEASE EXPLAIN IN DETAIL
Homework Answers
Since the painting is expected to maintain its real value for three years
The value at the end of three years(Future value) = $ 100,000
Given, Real Interest rate = 10%
Thus, Present Value of the painting = 100,000/(1+ interest rate)^ 3 = 100,000/(1.1)^3 = $ 75131.48
The answer is not $ 88,899. The steps are as above.
Add Answer to:
A painting is currently worth $100,000, and is
expected to maintain its real value for three...
28. Recently, in an ad on television, the announcer declared that the Indiana State Lottery was currently worth $3...
28. Recently, in an ad on television, the announcer declared that the Indiana State Lottery was currently worth $30,000,000. Starting one year from today, the lucky winner would receive $1,000,000 at the end of each of the next 30 years. At 6% interest rate and assuming there are no taxes on the winnings, what is the actual present value of this lottery for the winner? a. b. If gamblers bought a total of S30,000,000 in tickets and one person won,...
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!
1. Why does the right to collect a dollar in the future have a present value...
1. Why does the right to collect a dollar in the future have a present value that is less than a dollar? If you could lend money at a nominal interest rate of 12% per year, and interest rates were expected to remain unchanged, what would be the present value of the right to collect $400, 4 years from now? What would be the present value of the right to collect $100 at the end of the year, for each...
4. Finding the interest rate and the number of years The future value and present value...
4. Finding the 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 currently worth $12,800 will be worth $16, 124.31 three years in the future, what is the implied interest rate the investor will earn on the security-assuming that no additional deposits or withdrawals are made? 8.00% 6.40% 7.94% 1.26% for this...
Question 1: Discounting A. You find $100,000 under your mattress 25 years from now. What is the Present Value (PV)...
Question 1: Discounting A. You find $100,000 under your mattress 25 years from now. What is the Present Value (PV) of that $100,000 dollars if you assume 2.8% inflation over that 25-year period? (The answer is not the face value of $100,000, but much less) B. You are promised $1,000,000 in five years. Assuming that you can earn 5% interest on investments, how much is that $1,000,000 worth now?
1. Present Value (PV): In ten years you will inherit $100,000 from your grandfather’s trust. If...
1. Present Value (PV): In ten years you will inherit $100,000 from your grandfather’s trust. If interest rates are at 5%, how much is this worth today?
QUESTION 7 What's the present value of $100,000 discounted back 10 years if the appropriate interest...
QUESTION 7 What's the present value of $100,000 discounted back 10 years if the appropriate interest rate is 6.5%, compounded quarterly? QUESTION 13 Suppose you inherited $500,000 and invested it at 6.25% per year. How much could you withdraw at the end of each of the next 35 years? QUESTION 19 Suppose you borrowed $75,000 at a rate of 12% and must repay it in equal annual installments at the end of each of the next 5 years. 1. How...
11) Today, Thomas deposited $100,000 in a three-year. 12% CD that compounds quarterly What is the maturity value of the...
11) Today, Thomas deposited $100,000 in a three-year. 12% CD that compounds quarterly What is the maturity value of the CD? A) $109,270. B) $119,410. C) $309,090. D) $142,576. 12) Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal? A) $43.131. B) $35.000. C) $37,205. D) $35,069. 13) At the end of...
a) Iriz's stock is currently selling for RM160.00 per share and the firm's dividends are expected...
a) Iriz's stock is currently selling for RM160.00 per share and the firm's dividends are expected to grow at 5% indefinitely. In addition, Iriz's most recent dividend was RM5.50. The expected risk-free rate of return is 3%, the expected market return is 8%, and Iriz has a beta of 1.20. Required: i. Calculate the expected return based on the dividend growth model. (2 Marks) ii. What is the required return based on the CAPM? (2 Marks) iii. Would Iriz be...
A. A company has its stock currently selling at $67.50. The company is expected to grow...
A. A company has its stock currently selling at $67.50. The company is expected to grow at a constant rate of 7 percent. If the appropriate discount rate is 17 percent, what is the current dividend? A. $6.31 B. $6.39 C. $6.75 D. $5.91 E. $5.86 B. A stock will not pay a dividend for 6 years. At the end of the seventh year, it will pay a dividend of $7. This dividend will have constant growth of...
28. Recently, in an ad on television, the announcer declared that the Indiana State Lottery was currently worth $30,000,000. Starting one year from today, the lucky winner would receive $1,000,000 at the end of each of the next 30 years. At 6% interest rate and assuming there are no taxes on the winnings, what is the actual present value of this lottery for the winner? a. b. If gamblers bought a total of S30,000,000 in tickets and one person won,...
1. Why does the right to collect a dollar in the future have a present value that is less than a dollar? If you could lend money at a nominal interest rate of 12% per year, and interest rates were expected to remain unchanged, what would be the present value of the right to collect $400, 4 years from now? What would be the present value of the right to collect $100 at the end of the year, for each...
4. Finding the 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 currently worth $12,800 will be worth $16, 124.31 three years in the future, what is the implied interest rate the investor will earn on the security-assuming that no additional deposits or withdrawals are made? 8.00% 6.40% 7.94% 1.26% for this...
Question 1: Discounting A. You find $100,000 under your mattress 25 years from now. What is the Present Value (PV) of that $100,000 dollars if you assume 2.8% inflation over that 25-year period? (The answer is not the face value of $100,000, but much less) B. You are promised $1,000,000 in five years. Assuming that you can earn 5% interest on investments, how much is that $1,000,000 worth now?
11) Today, Thomas deposited $100,000 in a three-year. 12% CD that compounds quarterly What is the maturity value of the CD? A) $109,270. B) $119,410. C) $309,090. D) $142,576. 12) Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal? A) $43.131. B) $35.000. C) $37,205. D) $35,069. 13) At the end of...
a) Iriz's stock is currently selling for RM160.00 per share and the firm's dividends are expected to grow at 5% indefinitely. In addition, Iriz's most recent dividend was RM5.50. The expected risk-free rate of return is 3%, the expected market return is 8%, and Iriz has a beta of 1.20. Required: i. Calculate the expected return based on the dividend growth model. (2 Marks) ii. What is the required return based on the CAPM? (2 Marks) iii. Would Iriz be...
Most questions answered within 3 hours.
-
What does Thomas Whitney imply in his argument regarding
the “Word of God”?
asked 3 seconds ago -
How many mol of Ce4+ are in each 60 μL aliquot of
0.05 M Ce4+?
________...
asked 1 minute ago -
A nuclear power plant draws 3.0×106 L/min of cooling
water from the ocean.
If the water...
asked 2 minutes ago -
The Civil War cannon Model 1841 has a Muzzle Velocity of
1054ft/s (321.26m/s) if launched at...
asked 7 minutes ago -
C90A3F
What are the four hexadecimal values after the statement
executes and what are the values...
asked 8 minutes ago -
Which of the following is true of clinical significance? A. It
is a measure of how...
asked 39 minutes ago -
Pittsburg Savings & Loan makes four kinds of loans. These
loans, with the yearly interest rate...
asked 23 minutes ago -
a. If your income increases and you are subject to a
proportional tax system, what will...
asked 24 minutes ago -
Healthy people have body temperatures that are normally
distributed with a mean of 98.20 degrees Fahrenheit...
asked 59 minutes ago -
1. A crossover study was conducted to investigate whether oat
bran cereal helps to lower serum...
asked 34 minutes ago -
Where are the various locations that viral assembly can occur
within the cell and how does...
asked 34 minutes ago -
Imagine that you are the head of a profitable Silicon Valley
software company seeking to expand...
asked 34 minutes ago