Generous gift in terms of the future value of the asset

Assignment Help Financial Management
Reference no: EM131328319

To celebrate your nephew's first birthday, you are considering buying him a bond or depositing money in a savings account. If you ignore tax and other fee implications, which of the following options is the MOST generous gift in terms of the future value of the asset?

Buy a $100 bond at par value with 5% compounded semi-annually that will mature in 30 years.

Put $100 in a checking account earning 5% interest compounded annually.

Put $100 in a checking account earning 5% interest compounded semiannually.

Buy a $200 savings bond at half par value that will mature in 30 years.

Reference no: EM131328319

Questions Cloud

Determine the sources of capital for canon inc : Determine the sources of capital for Canon Inc. (ticker: J:CN@N) in each of the last five years. How much capital was raised through internal sources, and how much was raised through external sources?
What are me compositions and fractions of austenite : An alloy at 1000°C is 3%  carbon by weigm. what are me compositions and fractions of austenite (γ) and cementite (iron carbide) in the mixture?For lead-tin (Pb-Sn) alloy, answer the following questions. Use the space provided below to show all calcu..
Create a scatter plot of the memory usage of the processes : Create a scatter plot of the memory usage of the processes. Find the following measures of central tendency of the memory usage in kilobytes (Kb): Find the following measures of dispersion of the memory usage in Kb.
Evaluate the customer service standards and strategies : Critically evaluate the customer service standards and strategies adopted by EE. Please make the necessary recommendations that will enhance the customer service levels. You are required to use a wide range of relevant literature to support the..
Generous gift in terms of the future value of the asset : To celebrate your nephew's first birthday, you are considering buying him a bond or depositing money in a savings account. If you ignore tax and other fee implications, which of the following options is the MOST generous gift in terms of the future v..
Actions are likely to increase stock market efficiency : Evaluate whether the following actions are likely to increase stock market efficiency, decrease it, or leave it unchanged, and explain why. You are valuing an Indian company in rupees. The current exchange rate is Rs 45 per dollar and you have been a..
Calculate the number of shares outstanding : If the proposed recapitalization is adopted, calculate the number of shares outstanding, the per-share price, and the debt-to-equity ratio for USC.
Evaluate the customer service standards and strategies : Critically evaluate the customer service standards and strategies adopted by EE. Please make the necessary recommendations that will enhance the customer service levels. You are required to use a wide range of relevant literature to support the ar..
What is the delta of a put option with strike price : IBM stock currently sells for 49 dollars per share. Over 12 months the price will either go by 11.5 percent or down by -7.0 percent. The risk-free rate of interest is 4.5 percent continuously compounded. What is the delta of a put option with strike ..

Reviews

Write a Review

Financial Management Questions & Answers

  Explain the firm''s cash flow due to financing activities

At the end of the year, Tum Biscuit Co. had $160 million in cash on its balance sheet, and the firm had $305 million in cash at the end of the second year. What was the firm's cash flow (CF) due to financing activities in the second year?

  Dividends come from earnings

Dividends come from earnings; earnings come from sales revenue. But sales fluctuate widely from month to money, quarter to quarter, year to year. So is it remotely realistic to assume that the long-term growth in dividends is constant? Explain.

  Fixed-rate mortgage to buy a new home

You need a 25-year, fixed-rate mortgage to buy a new home for $255,000. Your mortgage bank will lend you the money at a 5.50 percent APR for this 300-month loan. However, you can afford monthly payments of only $950, so you offer to pay off any remai..

  What is the firms corporate cost of capital

Morningside Nursing Home, a not-for-profit corporation, is estimating its corporate cost of capital. Its tax-exempt debt currently requires an interest rate of 6.2 percent, and its target capital structure calls for 60 percent debt financing and 40 p..

  Sell the stock with margin and without margin

You purchase 500 shares of 2nd Chance Co. stock on margin at a price of $53. Your broker requires you to deposit $10,000. Suppose you sell the stock at a price of $44. What is your return? What would your return have been had you purchased the stock ..

  Upheld the affordable health care act

The Supreme Court of the Unites States recently upheld the Affordable Health Care Act. This act affects many businesses. How can we analyze the Healthcare situation as a valuation problem? If you were a private medical insurance company, how would yo..

  Will the new level of operating leverage

At an output level of 83,000 units, you calculate that the degree of operating leverage is 3. The output rises to 90,000 units. What will the percentage change in operating cash flow be? Will the new level of operating leverage be higher or lower?

  Find the sixth term and the sum of the 15 terms

Given the geometric progression 625, 125, 25,... find the sixth term and the sum of the 15 terms.- Draw the function y = 230(1.34)x .

  Most likely to create liability for fraud-misrepresentation

Alan and Brian contracted for Alan to mow Brian’s lawn once a week for 20 weeks, at a price of $20 per week. Three weeks later, Alan demands $25 per week to mow Brian’s lawn, and Brian agrees. Later, if Brian only pays Alan $20 per week and Alan sues..

  What is the value of the shareholders equity account

Building a balance sheet. Kroeger, inc., has current assets of $1,970, net fixed assets of $9,650, current liabilities of $1,250, and long-term debt of $4,370. What is the value of the shareholders' equity account for this firm? How much is net worki..

  Statements regarding arbitrage and security prices

Which of the following statements regarding arbitrage and security prices is incorrect?

  Constant-growth model-what price should the stock sell

Constant-Growth Model. Gentleman Gym just paid its annual dividend of $3 per share, and it is widely expected that the dividend will increase by 5% per year indefinitely. what price should the stock sell at? The discount rate is 15%. How would your a..

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