What rate of interest was used in present value computation

Assignment Help Finance Basics
Reference no: EM13262793

A local magazine is offering a $2,500 grand prize to one lucky winner. The prize will be paid in four annual payments of $625 each, starting one year after the drawing. How much would this prize be worth to you if you can earn 9 percent on your money?

A. $1,848.18
B. $2,024.82
C. $2,545.54
D. $2,450.14
E. $1,934.24

You have been told that you need $25,600 today in order to have $100,000 when you retire 35 years from now. What rate of interest was used in the present value computation? Assume interest is compounded annually.

A. 4.15 percent
B. 3.97 percent
C. 4.53 percent
D. 4.58 percent

Reference no: EM13262793

Questions Cloud

Calculate the nominal ahr capacity of the battery pack : The power required for traction at this velocity is 10kW. Assumed 10% drive train losses, and battery discharge efficiency is 80%. A 300V NiMH battery pack will be used for the Energy store with the following characteristics
What is the best description of an alkane : What is the best description of an alkane?
Find the angle of elevation of the hose : Firemen are shooting a stream of water at a burning building. A high-pressure hose shoots out the water with a speed of 23.0m/s as it leaves the hose nozzle. Find the angle of elevation of the hose
What is her uncorrected far-point distance : A nearsighted person wears contacts with a focal length of ? 6.5cm, what is her uncorrected far-point distance
What rate of interest was used in present value computation : A local magazine is offering a $2,500 grand prize to one lucky winner. The prize will be paid in four annual payments of $625 each, starting one year after the drawing. How much would this prize be worth to you if you can earn 9 percent on your mo..
Compute the emf of the coil : A 1000-turn coil of wire that is 2.4cm in diameter is in a magnetic field that drops from 0.15T to 0 T in 11ms, compute the emf of the coil
Explain what will the final count of hydrogen atoms be : A mole is equal to 6.02 x 10^23. 10 moles of hydrogen atoms are placed in a container. The hydrogen atoms are removed and counted one by one. What will the final count of hydrogen atoms be
What would be the weight used for equity in the computation : What would be the weight used for equity in the computation of FarCry's WACC?
Calculate a complete dupont analysis : calculate a complete dupont analysis calculating the ROE, ROA, profit margin, total aset turnover and equity mulitiplier from the conocophillips annual report, link to annual report supplied above.

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe zero cost collar

Using the option prices given below, give an example of a zero cost collar and describe how it could be used to hedge a long position in the underlying asset.

  Determine the portfolios required return

A portfolio manager has a $10 million portfolio, which consists of $1 million invested in ten separate stocks. The portfolio beta is 1.2. The risk-free rate is 5 percent and the market risk premium is 6 percent.

  What is its wacc rounded to two decimal places

How much of the new investment must be financed by common equity - What is its WACC rounded to two decimal places

  Compute the net realizable value of accounts receivable

An analysis and aging of accounts receivable of the Lucille Corporation at December 31, 2007, showed the following:

  Making profit by selling programs

Byron is considering to finance his college education by selling programs at the football games. There is a fixed expenses of $400 for printing these programs, & the variable cost is $3.

  Computation of value of bond and intrinsic value

Computation of value of bond and intrinsic value and Holding everything constant and assuming that the coupon is paid on a semiannual basis

  What is the value of the put option

What long position in the stock is necessary to hedge a long put option when the strike price is $32? Give the number of shares purchased as a percentage of the number of options purchased option.

  Explain theory about valuation procedures in investment bank

Explain Theory about valuation procedures in investment banking and heuristics rather than more sophisticated valuation procedures expedite the procedure? What do you think

  Describing the economic growth

Why is economic growth important? Why could the difference between the 2.5 percent and 3 percent annual growth rate be of great significance over many decades?

  Computation of roi

A corporation decides to buy new equipment for $10,000 with an expected useful life of four years. At the end of each of the four years, the cash flow from this equipment is expected to be $4000.

  Calculate the amortization expense

A patent was acquired through Grotius Corporation on January 1, 2000, at a cost of $72,000. The useful life of the patent was estimated to be ten years.

  Estimate what happens to the value of the portfolio

the gamma and vega of a delta neutral portfolio are 50 per $ and 25 per %, respectively. Estimate what happens to the value of the portfolio when there is a shock to the market casuing the underlying asset price to decrease by $3 and its volatilit..

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