Thinking of investing in annuity

Assignment Help Financial Management
Reference no: EM13847529

Ms. Roberts is thinking of investing in an annuity that pays her $10,000 in one year, and this payment keeps growing by 1% per year till the last payment that occurs 20 years from today. What is the fair value of this investment if the discount rate is 10%? Show your work.

Reference no: EM13847529

Questions Cloud

Write notes on critical review of literature : Write notes on critical review of literature
What are the advantages of target costing : What is the impact of target costing on profitability ? What are the advantages of target costing? What are the costs of non-conformance?
Complete the type of communication table : Complete the Type of Communication Table. Choose a concept and write an informative statement, an explanatory statement, and a persuasive statement for the concept in the appropriate boxes. An example has been completed for you in red
Discuss principles of taking credit for profit on contracts : Discuss briefly the principles to be followed while taking credit for profit on incomplete contracts.
Thinking of investing in annuity : Ms. Roberts is thinking of investing in an annuity that pays her $10,000 in one year, and this payment keeps growing by 1% per year till the last payment that occurs 20 years from today. What is the fair value of this investment if the discount rate ..
What amount of depletion should be recognized : In 2015, Ellie Co. purchased property with natural resources for 28,000,000. The property had a residual value if 5,000,000. However the entity is required to restore the property to the original condition at a discounted amount of 2,000,000. What am..
Present and future values of cash flow stream : What's the future value of a 5%, 5-year ordinary annuity that pays $600 each year? An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $400 at the end of Year 5, and $500 at the end of Year 6. Find the inter..
What are the advantages of time rate system of wage payment : State the circumstances in which time rate system of wage payment can be preferred in a factory. What are the advantages of this system?
Changes working capital policies to improve cash flow cycle : Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $120,000 (all on credit), and it earned a net profit of 7%. What would Strickler's ROA have been if the inven..

Reviews

Write a Review

Financial Management Questions & Answers

  Nominal and real interest rates

Write a short essay of 350-400 words for each of the following questions. Where possible, illustrate with an appropriate example in your answer. You must support your discussion with appropriate references.

  Savings account paying interest at the rate

The Pirerras are planning to go to Europe 4 years from now and have agreed to set aside $140/month for their trip. If they deposit this money at the end of each month into a savings account paying interest at the rate of 4%/year compounded monthly, h..

  Question 1the underlier is trading at a spot price of 100

question 1the underlier is trading at a spot price of 100. the ten year riskless interest rate is trading at 10 p.a.

  On a statement of cash flows of a financially healthy

On a statement of cash flows of a financially healthy company, net income should ordinarily be:

  Equity outstanding and bonds outstanding

Consider two firms A and B that are identical in all respects except capital structure. Firm A has $100 million in equity outstanding and $40 million in bonds outstanding. Firm B has $140 million in equity outstanding and $0 million in bonds outstand..

  What is the real rate of return on this bond

A bond that pays interest annually yields a rate of return of 10.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond?

  Shares of stock outstanding with a current market value

Frozen Yogurt Palace has 370,000 shares of stock outstanding with a current market value of $37.00 a share. You own 48,000 of those shares. Next month the election will be held to select four new members to the board of directors.

  Determine the net present value for the project

Dennison, Texas cell-phone giant Cellular Two is evaluating a proposal to manufacture and sell digital phones in Great Britain. The project will require an initial investment of £200 million to acquire and recondition the manufacturing plant in Manch..

  Avoided by hedging its exchange rate exposure

A U.S. importer makes a purchase from a German firm in the amount of 21,000 euros. At the current spot rate of 0.75 Euros per dollar, how much is this purchase in U.S. dollars? If in 90 days the dollar weakens so that the spot rate is 0.70 Euros per ..

  Should the company lease or buy the car

The lease would be for four years and requires a $7,500 payment. The company also has an initial cost of $2,500 for transporting the car. At the end of the lease, the van will return to the leasing company. The cost of capital is 8%. Should the compa..

  What is the value today

What is the value today of $3,300 per year, at a discount rate of 8 percent, if the first payment is received 7 years from today and the last payment is received 25 years from today? (Do not round intermediate calculations and round your final answer..

  What is expected dividend yield for portmans stock today

Portman Industries just paid a dividend of $2.16 per share. Th company expects the coming year to be very profitable, and its dividend is expected to grow by 12% over the next year. What is the expected dividend yield for Portman's stock today?

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