Calculate nominal interest rate, Taxation

Assignment Help:

You have been offered a unique investment opportunity today; you will receive $500 one year from now. If you invest $10,000 today, you will receive $500 one year from now, $1500 two years from now, and $10,000 ten years from now?

a) What is the NPV of the opportunity if the interest rate is 6%?  Should you take the opportunity?

b) What is the NPV of the opportunity if the interest rate is 2% per year? Should you take it now?

What is the present value of $1000 paid at the end of each of the next 100 years if the interest rate is 7% per year?

You have found there investment choices for a one- year deposit: 10% APR compounded monthly, 10% APR compounded annually, and 9% APR compounded daily. Compare the EAR for each for each investment choice. (Assume that there are 365 days in the year.)

Oppenheimer Bank is offering a 30-year mortgage with an EAR of 53/8% .If you plan to borrow $150,000, what will your monthly payment be?

If the rate of inflation is 5%, what nominal interest rate is necessary for you to earn a 3% real interest rate on your investment?

Your best taxable investment opportunity has an EAR of 4%. Your best tax-free investment opportunity has an EAR of 3%.  If your tax rate is 30%, which opportunity provides the higher after-tax interest rate?


Related Discussions:- Calculate nominal interest rate

Characteristics of a common resource, Suppose there are 40 commuters in App...

Suppose there are 40 commuters in Apple Valley, Minnesota who commute to downtown Minneapolis. They have two options for getting downtown: they can take the light rail or they can

Tax-exempt commercial paper, An unsecured short-term loan, generally issued...

An unsecured short-term loan, generally issued to finance short-term liabilities, which gives the debt holders (bondholders) some level of tax choice on the earnings from their deb

Introduction to Tax, To prepare Jackie O. Park''s tax return without the ai...

To prepare Jackie O. Park''s tax return without the aid of Tax preparation software, complete the following steps: Ensure that you have an Adobe Reader http://get.adobe.com/reade

Compute gross income from merchandise sales, 1. Ben lost his job when his e...

1. Ben lost his job when his employer moved its plant. During the year, he collected unemployment benefits for three months, a total of $1,800. While he was waiting to hear from pr

Individual taxation, #queTonya had the following items for last year: Salar...

#queTonya had the following items for last year: Salary $40,000 Short-term capital gain 12,000 Nonbusiness bad debt (25,000) Long-term capital gain 8,000 For the current year, Tony

Sec 351 of income tax act, Bob and Carl transfer property to Stone Corporat...

Bob and Carl transfer property to Stone Corporation for 90% and 10% of Stone Stock, respectively. Pursuant to a biding agreement concluded before the transfer, Bob sells half of hi

Tax, evaluate the importance of the principal issue litigated in the case i...

evaluate the importance of the principal issue litigated in the case in question using the tax research steps outlined in Appendix A of your text.

Corporation taxation, A and B are unrelated individuals. A forms Newco Inc....

A and B are unrelated individuals. A forms Newco Inc. on January 2 of the current year by transferring property with a basis of $10,000 and a value of $50,000 for all 50 shares of

Capital gains tax, Critically evaluate overseas experiences with this form....

Critically evaluate overseas experiences with this form.

Calculate the cost of preferred stock, Calculate the cost of preferred stoc...

Calculate the cost of preferred stock (r PS ) with the given information: Par Value = $200 Current Price = $208 Flotation Cost = $16 Annual Dividend = 12% of Par

Write Your Message!

Captcha
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