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

  Debate team 1 health care is a rightnbsp you will present

your instructor will divide the class into to different debate teams.nbsp you will be responsible for composing your

  What is the investment grade of your company''s bonds

What is the investment grade of your Company's bonds? Within their Notes to the Financial Statements can you identify any discussions on financial risk? If your Company has issued Bonds look at terms and identify the interest rates they are paying.

  Interest rates and capital markets

Assume you are the manager in a manufacturing business. How are the capital markets relevant to effective performance of your job?

  What is the difference between speculation and hedging

What is the difference between speculation and hedging. Why do business managers use hedging strategies. Des hedging reduce company risk How

  What is the highest apr

You want to borrow $89,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,650, but no more. Assuming monthly compounding, what is the highest APR you can afford on a 72-month loan?

  How is financial leverage created

How is financial leverage created? Describe how the degree of financial leverage is calculated.

  What is the difference in the effective annual rates

What is the difference in the effective annual rates charged by the two banks?

  What is the amount of the operating cash flow

Le Place has sales of $439,000, depreciation of $32,000, and net working capital of $56,000. The firm has a tax rate of 34% and a profit margin of 6%. The firm has no interest expense. What is the amount of the operating cash flow?

  Construct a functional block diagram

From one of the blocks in the operational functional flow diagram, show two levels of maintenance functions. Show how the operational functions and the maintenance functions relate.

  What will the market price of the security

The market price of a security is $55. Its expected rate of return is 9.26%. The risk-free rate is 4.26%, and the market risk premium is 5.26%. Assume the stock is expected to pay a constant dividend in perpetuity.

  What is meant by product diversity

Describe the two-stage process associated with plantwide overhead rates.- Describe the two-stage process for departmental overhead rates.

  What is this preferred stock selling for today

Blackstone Corporation's $7 preferred was issued five years ago. The risk-appropriate interest rate for the issue is currently 11%. What is this preferred stock selling for today?

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