What is the value of the fund today

Assignment Help Financial Management
Reference no: EM131087622

Your brother, who is 6 years old, just received a trust fund that will be worth $32,000 when he is 21 years old. If the fund earns 10 percent interest compounded annually, what is the value of the fund today?

Reference no: EM131087622

Questions Cloud

What rate of return is the buyer expecting to make : Joe Black just won a $550,000 lottery in Pennsylvania. Instead of receiving a lump sum, he found that he would receive $25,500 annually (end of year) for 20 years. Joe is 75 years old and wants his money now. He has been offered $140,827 to sell his ..
What is the company target debt-equity ratio : Fama’s Llamas has a weighted average cost of capital of 10.3 percent. The company’s cost of equity is 12 percent, and its pretax cost of debt is 8.3 percent. The tax rate is 38 percent. What is the company’s target debt−equity ratio?
Consider two mutually exclusive new product launch projects : Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for Nagano Golf is 16 percent.
Company investment policy constant : If we hold the company's investment policy constant, then dividend policy is a tradeoff between cash dividends and the issue or repurchase of common stock. Explain fully, stating any assumptions you might make.
What is the value of the fund today : Your brother, who is 6 years old, just received a trust fund that will be worth $32,000 when he is 21 years old. If the fund earns 10 percent interest compounded annually, what is the value of the fund today?
What stock prices will you break even on the straddle : You establish a straddle on Walmart using September call and put options with a strike price of $51. The call premium is $4.30 and the put premium is $5.05. What is the most you can lose on this position? what stock prices will you break even on the ..
Risk-free interest rate-the stock pays no dividends : You buy a share of stock, write a one-year call option with X = $15, and buy a one-year put option with X = $15. Your net outlay to establish the entire portfolio is $14.50. What must be the risk-free interest rate? The stock pays no dividends.
Yield to maturity remains unchanged : A bond has a par value of $1,000, a time to maturity of 20 years, and a coupon rate of 7.50% with interest paid annually. If the current market price is $750, what will be the approximate capital gain of this bond over the next year if its yield to m..
What will be the realized compound yield to maturity : A two-year bond with par value $1,000 making annual coupon payments of $99 is priced at $1,000. What is the yield to maturity of the bond? Yield to maturity %. What will be the realized compound yield to maturity if the one-year interest rate next ye..

Reviews

Write a Review

Financial Management Questions & Answers

  Each department in a company should have an equal voice

Collecting samples is hampered by great distances between subsidiaries. Each department in a company should have an equal voice.

  The sustainable growth rate represents

The sustainable growth rate represents the ____ rate at which a firm can grow:

  What exchange rate will you break-even

The current spot exchange rate is $1.55 = €1.00 and the three-month forward rate is $1.60 = €1.00. Consider a three-month American call option on €62,500 with a strike price of $1.50 = €1.00. If you pay an option premium of $5,000 to buy this call, a..

  Excess short-term cash in particular money market investment

The treasurer of a large corporation wants to invest $22 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.33 percent; that is, the EAR for this investment is 3.33 per..

  What is correlation coefficient between returns of two stock

The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0940. The variance of Willow is 0.1890, and the variance of Sky Diamond is 0.1210. What is the correlation coefficient between the returns of the two stocks?

  What price would bond investors be willing to pay

Nedo Enterprises originally sold bonds in 2011 with a 10 year maturity, $1000 par, 6% coupon paying annual interest. It is now 2015 and 4 years later. Bonds of similar risk selling at par know have a 5% coupon rate. What price would bond investors be..

  Deciding whether to sponsor racing team for cost

An auto-parts company is deciding whether to sponsor a racing team for a cost of $3500000. The sponsorship would last for 4 years and is expected to increase cash flows by $760000 per year. If the discount rate is 9%, what will be the change in the v..

  Compute the percentage change in the price of the bonds

Bond-A: $ 1000 Face value, 5 year term, 5% coupon. Bond-B: $ 1000 Face value, 20 year term, 5% coupon. a. Price the bonds if your required rate of return is 5%. b. Price the bonds if your required rate of return is 7%. c. Price the bonds if your requ..

  Group of new customers and creating new annual sales

Price Corp. is considering selling to a group of new customers and creating new annual sales of $90,000. 5% will be uncollectible. The collection cost on these accounts is 3% of new sales, the cost of producing and selling is 80% of sales and the fir..

  Cost of preferred stock

(Cost of preferred stock) the preferred stock of Gator Industries sells for $35.84 and pays $2.75 per year in dividends. What is the cost of preferred stock financing? If Gator were to issue 519,000 more preferred shares just like the ones it current..

  What are some of the advantage or disadvantage of this bill

Outline the major provisions of the Gramm Leach Bliley Act of 1999. Many experts considered this bill to favor larger multibank holding companies. What are some of the advantages or disadvantages of this bill to the largest and smallest commercial ba..

  What is current beta

Harley Motors has $25 million in assets, which were financed with $10 million of debt and $15 million of equity. Harley's tax rate is 40%. If Harley's unlevered beta is 0.8, what is Harley's current (levered) beta? Show your work.

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