Discount rate on investment

Assignment Help Financial Management
Reference no: EM13731357

You are being offered an investment that will pay you (and your heirs) $19,853 per year forever, starting 16 years from now. If your discount rate on this investment is 5.8 percent, how much would you be willing to pay for it today?

Reference no: EM13731357

Questions Cloud

What is effective annual interest rate of trade for credit : Company needs to raise $400,000for one year to supply working capital to a new store. Buts from supplier on terms 2/10 net 90and it's currently pay on tenth day. Forgo discount pay on 90th day and get the $400,000 needed to form costly trade credit. ..
Constant growth valuation-what is required rate of return : Harrison Clothiers' stock currently sells for $40 a share. It just paid a dividend of $3 a share (that is, D0 = 3). The dividend is expected to grow at a constant rate of 7% a year.
Non constant growth-what is the value of the stock today : Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from toda..
Get average receivables of discount customers : Sell on term 1/10, net 30. Gross sales last year $4,821,500 and accounts receivable averaged $434,500. Customers paid on tenth day and took discount. What are the nominal and effective cost of trade credit to non discount customers
Discount rate on investment : You are being offered an investment that will pay you (and your heirs) $19,853 per year forever, starting 16 years from now. If your discount rate on this investment is 5.8 percent, how much would you be willing to pay for it today?
Make in order to partake of future cybernetic goodness : You estimate that you will need $716 thousand in 30 years to buy some cybernetic body enhancements, including infrared vision, retractable claws, and expanded brain storage capacity. To achieve your financial goal, you want to make three equal-sized ..
About spending your entire life working : You are not thrilled about spending your entire life working. So, you have decided that you will save $9 thousand a year, starting at the end of this year, and retire as soon as you can accumulate $1 million. If you can earn an average of 7.23 percen..
Cost of trade credit : Cost of trade credit. If a firm buys under terms of 3/15, net 50, but actually pays on the twenty day and still takes discount, what is the nominal cost of its non free trade credit? Assume 365 days in calculations. Does it receive more or less credi..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Interest rate outstanding

A firm has an issue of $1,000 par value bonds with a 11 percent stated interest rate outstanding. The issue pays interest annually and has 10 years remaining to its maturity date. If bonds of similar risk are currently earning 8 percent, the firm's b..

  Rate really makes any difference in the net present value

Dennis wants to determine if the discount rate really makes any difference in the net present value of a project. He feels that if a project is acceptable on one rate of return, it will be acceptable at all rates of return. To explain why his thinkin..

  Explain where in the consolidated financial statements

Explain where in the consolidated Financial Statements of Group X would you find evidence of a S i Non Controlling Interest (NCI) using AASB - provide the relevant paragraphs of the AASB Standards for all of the following requirements:

  Price for a foreign currency trade

A price for a foreign currency trade that will be executed thirty days from now is called a:

  Balanced scorecard performance analysis

Explain the potential value of a BSC to Anthony's Orchard. Describe specific ways that the introduction of a BSC can contribute to this organisation - Balanced Scorecard Performance Analysis

  What is the amount of bid using options contract

What is the amount of bid using Borrowing and Lending, what is the amount of bid using Forward contract and what is the amount of bid using Options contract?

  Firm presents value capital structure described

Market value will be 60 millions. During the year company will raise and invest 20 million in new projects. The firm presents value capital structure described below. No short -term debt. Debt: 30,000,000 Common equity: 30,000,000 and Total equity: 6..

  Retirement account rate

A 40-year-old individual establishes a retirement account that is expected to earn 7 percent annually. Contributions will be $2,000 annually at the beginning of each year. Initially, the saver expects to start drawing on the account at age 60.

  What is the standard deviation of the portfolio

A portfolio has 40% of its value in IBM shares and the rest in Microsoft (MSFT). The volatility of IBM and MSFT are 40% and 30%, respectively, and the correlation between IBM and MSFT is -0.3. What is the standard deviation of the portfolio?

  Assume that the company pays no dividends

Broussard Skateboard's sales are expected to increase by 15% from $7.4 million in 2013 to $8.51 million in 2014. Its assets totalled $4 million at the end of 2013. Baxter is already at full capacity, so its assets must grow at the same rate as projec..

  Find out that all of casters were defective and unusable

This caused the company to default on several contracts for rolling cabinets as it ran out of casters before it could secure replacements for the defective ones. Cabinet Co. was able to replace the casters at a 15% increase in cost.

  International financenbspcritics of the field of

international financenbspcritics of the field of international finance charge that the field is simply corporate

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