Reference no: EM131315766
A very odd lottery offers the following annuity payment on the last day of each period. The payment amount is $5 ,000, and it will be received 4 times per year. (hint; this is a regular annuity!) You will receive the periodic sum (annuity payment) for 16 years. You ask an investment adviser and they estimate your opportunity cost of funds to be 4.00% (nominal stated rate). At what instant payout would you be indifferent between the annuity and cash now? i.e. what is the present value of the annuity? (answer in $s, xxxx.xx w/ 2 decimal places.)
|
Number of potential buyers to submit bids for mineral rights
: Gus Vincent sent invitations to a number of potential buyers to submit bids for the mineral rights to his 2,000-acre parcel in upstate New York on the outskirts of the City of Hudson. Seven bids were received, including the highest bid from Internati..
|
|
Real risk-free rate-maturity risk premium is zero
: Assume the following: The real risk-free rate, r*, is expected to remain constant at 3%. Inflation is expected to be 3% next year and then to be constant at 2% a year thereafter. The maturity risk premium is zero. Given this information, which of the..
|
|
Ranges of the growth rates and the resulting dividends
: A stock pays dividends of $1.00 at t = 1. (D1 is provided here, not D0) It is growing at 35% between t =1 and t = 2, after which the growth rate drops to 10%, and will continue at that rate into the future. If the discount rate for this stock is 1..
|
|
Company expects this equipment will lead to cash flows
: Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $816,322, $863,275, $937,250, $1,017,610, $1,212,960, and $1,225,000 over the next six years. If the appropriate disco..
|
|
Indifferent between the annuity and cash now
: A very odd lottery offers the following annuity payment on the last day of each period. The payment amount is $5 ,000, and it will be received 4 times per year. (hint; this is a regular annuity) At what instant payout would you be indifferent between..
|
|
What is the expected future value in five years
: Suppose I invest a lump amount of $5121.00 with a promised nominal rate of 5.78% per year. If interest compounds quarterly (4 times per year), what is the expected future value in 5 years?
|
|
What is the compound annual rate implied
: Compound Frequency Payday loans are very short-term loans that charge very high interest rates. You can borrow $1,700 today and repay $1,972 in two weeks. What is the compound annual rate implied by this 16 percent rate charged for only two weeks?
|
|
Find the maximum arbitrage profit
: Find the maximum arbitrage profit (in dollars) to someone that has access to $10 million at an interest rate of 2%.
|
|
What are the earnings per share
: Income Statement Bullseye, Inc.'s 2008 income statement lists the following income and expenses: EBIT = $700,000, Interest expense = $50,000, and Taxes = $217,000. Bullseye's has no preferred stock outstanding and 300,000 shares of common stock outst..
|