Accumulate present value or future value

Assignment Help Financial Management
Reference no: EM131068653

Each of the following problems describes an annuity. Determine whether the amount indicated is the annuity’s present value or future value. Also, provide a 1-sentence explanation.

(a) The Belcoda Municipal Electric Company expects that in 5 years’ time, it will need to make significant upgrades to its equipment. In order to set aside enough money to pay these expenses, the utility has begun depositing $98,000 each quarter in to an investment account each quarter. Is the amount they are trying to accumulate a present value or future value?

(b) Otisco County won a judgment against a former contractor that will require the contractor to pay the county $52,000 per year for the next 20 years. Instead of having to make payments for the next 20 years, the contractor offers to pay the county $835,000 in one lump sum immediately. Does the $835,000 amount represent a present value or future value?

(c) Three years ago, Merl bought a new car and borrowed the entire cost. Is the cost of the car the present value of his monthly payments or the future value?

Reference no: EM131068653

Questions Cloud

Illustrate the income consumption curve : An individual consumes two goods, clothing and food.  Given the information below, illustrate the income consumption curve, and the Engel curves for clothing and food.
What return is this investment offering : A financial planning service offers a college savings program. The plan calls for you to make six annual payments of $15,000 each, with the first payment occurring today, your child’s 12th birthday. Beginning on your child’s 18th birthday, the plan w..
Calculate the EAC for both conveyor belt systems : Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $240,000, has a four-year life, and requires $75,000 in pretax annual operating costs. Calculate the EAC for both conveyor belt sys..
How can corporate social responsibility be meaningful : ASSIGNMENT BRIEF - MBALN707 -Business Ethics - How can Corporate Social Responsibility be meaningful if it is not based on formal binding legislation enforcement?
Accumulate present value or future value : Each of the following problems describes an annuity. Determine whether the amount indicated is the annuity’s present value or future value. Also, provide a 1-sentence explanation. Is the amount they are trying to accumulate a present value or future ..
Company pricing and positioning decisions : Develop at least two visual aids (e.g., charts, graphs, or tables) to support your argument.Evaluate whether the company's pricing and positioning decisions contribute to or hinder that success.Evaluate whether the strategy currently used by your ..
What is the relevance of ethics in the above scenario : What is the relevance of ethics in the above scenario?
The other is heavy truck used to haul equipment : Your small remodeling business has two work vehicles. One is a small passenger car used for job-site visits and for other general business purposes. The other is a heavy truck used to haul equipment. How many miles would you have to drive the car bef..
Determining the role unions : In a 2-3 page essay, discuss what you see as the future of labor unions and the role they will/will not play in the U.S. economy. In your essay, be sure to consider the factors that you see as critical in determining the role unions will play in ..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Calculate the variance of a portfolio consisting

Toyota has an expected return of 21%, and a variance of 0.014. Honda has an expected return of 19%, and a variance of 0.009. The covariance between Toyota and Honda is 0.05. Using these data, calculate the variance of a portfolio consisting of 50% To..

  Make equal semi-annual payments-what is the EAR of the loan

Fairfax Paint just borrowed 66,800 dollars. The terms of the loan require the company to make equal semi-annual payments forever. The first semi-annual payment is due in 6 months. If the regular semi-annual loan payment is 4,800 dollars, then what is..

  Age affect berkshire hathaways recent strategic moves

How does Mr. Buffett’s age affect Berkshire Hathaway’s recent strategic moves such as buying Burlington Northern Santa Fe Railroad in 2010 instead of another large insurance company?

  Value of operations

Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 10%. The company's weighted average cost of ..

  What would happen to us dollar versus other currencies

Explain what would happen if we were to suddenly find large new oil supplies in Alaska. Likewise, explain what would happen if terrorist attack destroy several of our oil terminals. Discuss what would happen to the US dollar versus other currencies f..

  Easement by prescription across

The appeals court held that Sims did have an easement by prescription across the Moran’s property. Sims asked them to give it to him, but they would not. Why not? The Morans did not own the property for the ten years during which Sims used the drivew..

  Specializes in underwriting new issues by small firms

Work in excel, security brokers inc. specializes in underwriting new issues by small firms on a recent offerering of beedles inc, the term as follows price to public $ 15 per share, number of shares $3 million , proceeds to beedles $14,000,000.

  What is the bonds expected rate of return

The market price is $900 for a 10-year bond that pays 8% interest semi annually. What is the bond's expected rate of return? If the required rate of return is 11%, is this bond overpriced, fairly priced, or underpriced? (Please show your calculation)

  Actions would increase the companys current ratio

Lincoln Industries' current ratio is 0.5. Considered alone, which of the following actions would increase the company's current ratio?

  Depreciation tax shield

Fill in the missing numbers for the following income statement. (Input all amounts as positive values. Do not round intermediate calculations.) Sales $ 676,900 Costs 431,800 Depreciation 104,400 EBIT $ Taxes (35%) Net income $ Calculate the OCF. OCF ..

  Permanently restricted and temporarily restricted net assets

What is the traditional name for this statement? What is the purpose of this statement? What are the main sections of this statement? Discuss the difference between permanently restricted and temporarily restricted net assets.

  Using the formula and financial calculator methods

What is the present value of a 6-year annuity of $2,250 per period in which payments come at the beginning of each period? The interest rate is 10 percent. Use Appendix D for an approximate answer, but calculate your final answer using the formula an..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd