ZuoTi.Pro
Question

Suppose a house is worth for $50 million, payable in 20 quarterly payments of $2,500,000 (2.5...

Suppose a house is worth for $50 million, payable in 20 quarterly payments of $2,500,000 (2.5 million dollars) starting EXACTLY SIX months from TODAY. Interest rate implicit in deal 6% APR, compounded quarterly, what is the PV of the payments you will receive? Show all steps including calculation of r...

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Annual Rate = 6%

Quarterly Rate = 6%/4 = 1.5%

Number of payments = 20

Present value of payments 3 months from now = 2,500,000*PVAF(1.5%, 20 periods)

= 2,500,000*17.1686

= $42,921,500

Present value today = 42,921,500/(1.015)

= $42,287,192.12

0 0
Add a comment
Know the answer?
Add Answer to:
Suppose a house is worth for $50 million, payable in 20 quarterly payments of $2,500,000 (2.5...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • question 3 & 4 3. You plan to invest $300 at the beginning of each month, starting on October 1, 2012, and the last investment will be made on September 1, 2014. The payments will be invested...

    question 3 & 4 3. You plan to invest $300 at the beginning of each month, starting on October 1, 2012, and the last investment will be made on September 1, 2014. The payments will be invested at 3.0% APR compounded monthly (a)"What is the value of this annuity on October 1, 20147 (b) What is the value of this annuity on October 1, 20127 4. You won the lottery! The jackpot is $120 million. You have the option to...

  • only numbers 2,3, and 6 You are trying to decide a present worth of a contract....

    only numbers 2,3, and 6 You are trying to decide a present worth of a contract. You will receive $10,000 when the contract is signed, a $20,000 payment at the end of Year 1, and $30,000 at the end of Year 2. and $40,000 at the end of Year 3, and $50,000 at the end of Year 4 when the project is completed. Your annual costs for this project are $10,000 per year. What is the present worth of the...

  • Please help by providing explanations/step-by-step processes for solutions. Thank you in advance! 1. You are 20...

    Please help by providing explanations/step-by-step processes for solutions. Thank you in advance! 1. You are 20 years old. Starting at age 70 (in 50 years), it is expected that you will begin to receive a $1,500 monthly check from Social Security. You expect to live until you are 86 years old. Assuming a discount rate of 5%, what is the value today of the expected stream of Social Security payments? 2. 5. Suppose an investment promises to pay you $10,000...

  • What is an annuity? Select one: a. present worth of a series of equal payments. b....

    What is an annuity? Select one: a. present worth of a series of equal payments. b. a single payment. c. a series of payments that changes by a constant amount from one period to the next. d. a series of equal payments over a sequence of equal periods. e. a series of payments that changes by the same proportion from one period to the next. Question 2 The present worth factor Select one: a. gives the future value equivalent to...

  • 1. The unit cost of installing a solar power system per km² was $5,000 in 2010...

    1. The unit cost of installing a solar power system per km² was $5,000 in 2010 when the construction cost index was 1,850. Construction of a 5 MW power system requires 50 km² of land. Estimate the cost of constructing a solar power system of 20 MW in 2020 given that the construction cost index is 2,450 and the size-factor is 0.75? 2. A company that manufactures general-purpose transducers invested $2 million four years ago in high-yield junk box bonds....

  • I need to find the solutions using a BA 2 Plus financial calculator NOT through excel....

    I need to find the solutions using a BA 2 Plus financial calculator NOT through excel. 5 and 6 are not needed But 9 and 10 are very important. Question 5 5 pts You are taking out a car loan and will make payments of $315 each month (beginning one month from today). for a total of 60 monthly payments. If the interest rate on the loan is 0.83% (the effective monthly rate on this loan), how much are you...

  • Investing $13,000 for each of eight years in an annuity due with a 6% interest rate,...

    Investing $13,000 for each of eight years in an annuity due with a 6% interest rate, the value at the end will be: ____________________________________________ Last year Blueridge Corporation's sales were $280 million.  If sales grow at 10% per year, how large (in millions) will they be 5 years later? $14000(.10)=1400 How much would $200,000 due in 50 years be worth today if the discount rate were 7.5%? =PV(7.5%,,50,,-20000) =537.78426453 =$537.78 Five years ago, Glow Go Inc. earned $7.50 per share.  Its earnings...

  • Project Case: Focus Drilling Focus Drilling Supplies has been growing steadily over the last 20 years....

    Project Case: Focus Drilling Focus Drilling Supplies has been growing steadily over the last 20 years. With increased exploration in the mining sector, the company has decided to expand their facilities for supplies and custom drill bit production to meet the increased demand. The expansion will occur over 4 years and is expected to require $2.8 million. Management has developed a payment plan for carrying out this expansion. The plan requires a cash input of $300,000 now, $700,000 one year...

  • I need help on question 2. MODULE IV: TIME VALUE OF MONEY INTRODUCTION The time value...

    I need help on question 2. MODULE IV: TIME VALUE OF MONEY INTRODUCTION The time value of money analysis has many a lysis has many applications, ranging from setting hedules for paying off loans to decisions about whether to invest in a partie financial instrument. First, let's define the following notations: I = the interest rate per period Na the total number of payment periods in an annuity PMT = the annuity payment made each period PV = present value...

  • Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question...

    Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question 4 12 Question 5 13 Question 6 14 Question 7 15 Question 8 16 Question 9 17 Question 10 18 19 20 Single Amount or Annuity 21 Periodic Interest Rate 22 Number of Periods 23 24 25 Present Value of Single Amount 26 27 Future Value of Single Amount 28 29 Future Value of An Annuity...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT