User Account

All Pages

Which alternative would you choose if money can earn 8.25%

Assignment Help Finance Basics
Reference no: EM13909698

1) You work for a company that provides a pension plan to which the company contributes 50 percent of the amount you contribute. For example, if you specify that $1000 of your annual salary is to go into the plan, the company will add $500 to make the total contribution $1500 per year. The plan guarantees an annual rate of return of 6%.

If you believe you can safely earn 8% per year by investing money yourself, is it worthwhile belonging to the company plan in order to get the company's $500 contribution each year? Assume that you expect to retire in 30 years and that you will set aside $1000 per year at the end of each of the next 30 years regardless of the plan you choose.

2) A lottery offers the winner the choice between $150,000 cash prize or month-end payments of $1000 for 12 ½ years, increasing to $1500 per month for the next 12 ½ years. Which alternative would you choose if money can earn 8.25% compounded monthly over the 25-year period?

Reference no: EM13909698

Questions Cloud

Symbolic interaction perspective media analysis : Symbolic Interaction Perspective Media Analysis
Victory company uses weighted average process costing : Victory Company uses weighted average process costing to account for its production costs
Find the social marginal cost curve : The demand (MB) for a good is given by P= 20-Q. The private marginal cost is given by PMC= 6+Q, and the marginal damage function is given by MD = 2+Q. Find the social marginal cost curve
The influence of corporate sourcing decisions : The influence of corporate sourcing decisions interacts with internal design, production, finance, marketing, and accounting-True-False
Which alternative would you choose if money can earn 8.25% : A lottery offers the winner the choice between $150,000 cash prize or month-end payments of $1000 for 12 ½ years, increasing to $1500 per month for the next 12 ½ years. Which alternative would you choose if money can earn 8.25% compounded monthly ..
Feasibility study outlined in the daniels and dickson (1990) : feasibility study outlined in the Daniels and Dickson (1990) article as a model, and including a minimum of six other scholarly sources, create a 12- to 15-page feasibility study that includes the following headings and supporting information:
Find the pmf for number of customers entering the mth bus : Find the PMF for the number of customers entering the mth bus given that the interarrival interval between bus m - 1 and bus m is x.
Examine the validity of the assumptions made : Examine whether the laboratories are consistent in their measurements of the differ-ences in the amounts of niacin. Examine the validity of the assumptions made in your analysis
Calculate amounts for the new debt issuance : Calculate amounts for the new debt issuance and complete the amortization schedule and Complete the journal entries for the new debt issuance and first interest payment.

Reviews

Write a Review

Finance Basics Questions & Answers

  Which the net cash flows per year are shown below

A company has the opportunity to do any of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 12%. Which should the company do and why? You must use at least two capital budgeting methods. Show yo..

  Additional external financing hint efr calculation

Does the firm require additional external financing hint EFR calculation

  What is the after-tax cost of preffered stock

A firm's preferred stock pays an annual dividend of $2, and the stock sells for $65. Flotation costs for new issuances of preferred stock are 5% of the stock value. What is the after-tax cost of preffered stock if the firm's tax rate is 30%?

  A required rate of return equal to 16 percent if the

zr corporations stock has a beta coefficient equal to 1.8 and a required rate of return equal to 16 percent. if the

  How much external financing will frisch fish need

How much external financing will Frisch Fish need assuming no organically generated increase in liabilities?

  Identify the most efficient capital structures

Identify the most efficient capital structures for both a manufacturing company and a software development firm.

  Recommend a strategy for financial administrators

Recommend a strategy for financial administrators to balance the tension between having inventory on hand when it is needed versus the carry cost to the organization. Provide support for your recommendation.

  What was fielding projected loss for march

Fielding has no short term borrowing as of March 1st, 2008. Assume that the interest rate on short term borrowing is 1% per month. What was Fielding's projected loss for March?

  Lottery-annuity or lump sum

Assume you won the lottery for $7M. You have the following two choices in how you want to receive your prize: Which is the better option?

  Discuss each type of savings bonds in terms of risk payout

discuss each type of savings bonds in terms of risk payout and growth.discuss which bond receives the potential best

  At what price would you expect the firm to sell

A firm projects an ROE of 20% and it will maintain a plowback ratio of .30. The next year's earning are expected to be $2.0/per share. Assume investors expect 12% rate of return on the stock. Consider the dividends are  expected to grow at a constant..

  If a company wants to increase its reported income by

if a company wants to increase its reported income by manipulating its investment accounts which should it do?a sell

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd