What is the relationship between discounting and compounding

Assignment Help Finance Basics
Reference no: EM131435828

Question: a. What is the relationship between discounting and compounding?

b. Distinguish between the present value factor and the annuity present value factor?

c-1. What will $ 6,700 invested for 28 years at 11 percent compounded annually grow to?

c-2. How many years will it take $ 540 to grow to $ 11,515.44 if it is invested at 12 percent compounded annually?

c-3. At what rate would $ 1,700 have to be invested to grow to $20,692.71 in 29 years?

d. Calculate the future sum of $1,200 , given that it will be held in the bank for 5 years and earn 14 percent compounded semiannually.

e. What is an annuity due? How does this differ from an ordinary annuity?

f. What is the present value of an ordinary annuity of $ 1,600 per year for 6 years discounted back to the present at 11 percent? What would be the present value if it were an annuity due?

g. What is the future value of an ordinary annuity of $1,600 per year for 6 years compounded at 11 percent? What would be the future value if it were an annuity due?

h. You have just borrowed $ 240,000 , and you agree to pay it back over the next 20 years in 20 equal end-of-year payments plus 11 percent compound interest on the unpaid balance. What will be the size of these payments?

i. What is the present value of a $1,200 perpetuity discounted back to the present at 14 percent?

j. What is the present value of a $ 1,600 annuity for 10 years, with the first payment occurring at the end of year 10 (that is, ten $1,600 payments occurring at the end of year 10 through year 19), given a discount rate of 16 percent?

k.Given a discount rate of 8 percent, what is the present value of a perpetuity of $ 1,700 per year if the first payment does not begin until the end of year 10?

Reference no: EM131435828

Questions Cloud

Prepare a general fund balance sheet as of april : Prepare a General Fund balance sheet as of April 30, 2017. Prepare a statement of revenues, expenditures, and changes in fund balance for the year ended April 30, 2017. Do not prepare the government-wide financial statements.
Return to the ambulatory care unit be coded : A patient is admitted to the ambulatory unit to give blood (autodonor) for surgery he will have the following week. On the way home, the patient experiences syncope and returns to the ambulatory care unit for care. How should the return to the ambula..
Describe the relationship between given two variables : Construct a scatter plot of these data. Describe the relationship between these two variables.- Compute the sample correlation coefficient. Does this value support your answer in part (a)? Why or why not?
Determine the number of calories needed : Determine the number of calories needed to change 28 g of water at 25 Celsius into steam at 100 Celsius.
What is the relationship between discounting and compounding : a. What is the relationship between discounting and compounding? b. Distinguish between the present value factor and the annuity present value factor? c-1. What will $ 6,700 invested for 28 years at 11 percent compounded annually grow to?
Find the estimated regression line : Find the estimated regression line, and complete the summary ANOVA table. Conduct an F test for a significant regression. Use a significance level of 0.01.
What are possible motives for vehicle arson : Arson, one of several possible causes of fires in all types of vehicles and vessels, costs millions of dollars annually. What are possible motives for vehicle arson? What should an investigator look into when investigating a fire that might indica..
What is human centered design thinking : What is creative confidence and why does it matter in the process of innovation? Create a picture showing visually what you think creative confidence is. What is Human Centered Design Thinking and how does it differ from the traditional way organizat..
Outline each given form or draw each formula : Outline each form or draw each formula. Compare and contrast Opera, Oratorio and Cantata. Use lecture notes and give specific examples of meaning and differences.

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe the forces of globalization

Describe the forces of globalization and its implications for the multinational firm. Interpret the operation of the international financial system, its current state, and challenges for the future.

  Training program explaining net present value

You have been asked by a manager in your organization to put together a training program explaining Net Present Value (NPV) and Future Value (FV) and how they are used to evaluate the price of stock.

  Calculate the npv

Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system.  Calculate the NPV.

  What about during an economic boom

The dividend payout ratio equals dividends paid divided by earnings. How would you expect this ratio to behave during a recession? What about during an economic boom?

  Explain what working capital, net working capital

Explain what working capital, net working capital, and the working capital cycle mean in terms of this example.

  What is the inflation premium on five-year bonds

The maturity risk premium for all bonds is found with the formula MRP = (t - 1) x 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on five-year bonds?

  Question regarding efficient market and expected return

In efficient market the expected return on each stock is the same. Check whether true or false.

  Distributions of monthly intc returns and msft returns

MAF759 - QUANTITATIVE METHODS FOR FINANCE - Calculate monthly discrete returns (hint: holding period returns) for the NASDAQ index, Intel Corporation (INTC) and Microsoft Corporation (MSFT) stocks prices, respectively.

  Do any of these firms appear to have a cash flow problem

Comment on the difference between net cash provided by operating activities and net income including noncontrolling interest. Speculate on which number is likely to be the better indicator of long-term profitability.

  Assessment of company-team leadership and roles

Create a list of potential areas of weakness based on the information you have in the case brief. Explain the interventions that may need to take place in the senior management team, finance, marketing, and training departments

  How does selected company dividend payout

How does your selected company's dividend payout, dividend yield, and dividend per share compare to other companies in its industry? Has the company's dividend strategy been similar to other companies in its industry?

  Financial crises happen in various parts of the world

Financial crises happen in various parts of the world.

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