• At the Beach
    the interest rate is 7 percent? What is the present value of these cash flows? Annuity Present Value You are looking into an investment that will pay you $12,000 per year for the next 10 years. If you require a 15 percent return, what is the most you would pay for this investment? APR versus EAR The...
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  • Solutions
    will depend on how much you value the existing miles (which will depend on your likelihood of using them in the future). 3-6. Suppose the risk-free interest rate is 4%. a. c. a. b. c. Having $200 today is equivalent to having what amount in one year? Which would you prefer, $200 today or $200...
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  • Homework #1: Solu Utions
    1.08 18 = 1, 000   3    Homework #1: Solutions  Fin555  4-11. Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value...
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  • Business Mathematics
    ) approximate number of days. 5. Find the amount if Php 30, 000 is invested at 14 ¼ % for 100 days using (a) exact interest, (b) ordinary interest. 6. If Mr. Cruz borrowed Php 20, 000 at the bank on October 15, 2001, what amount must he pay on April 30, 2002? 7. If money is worth 14...
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  • Student
    Value with Daily Compounding You need R15 000 in 3 years for a new car. If you can deposit money into an account that pays an APR of 5,5% based on daily compounding, how much would you need to deposit? ◦ Daily rate = 0,055 / 365 = 0,00015068493 ◦ Number of days = 3(365) = 1 095 ◦ PV = 15 000...
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  • Sample Problems Futures
    :2, E(~rm) = 20%, rf = 10%, both per annum; and your expectation of the price of copper in 1 year is $1.224 per lb. What should the futures price be if the copper market is in equilibrium? Suppose a rm had 50,000 lbs of copper as a receivable in 1 year's time. What is its present value, and is...
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  • Klein
    amount received at the end of the period? Exercise 5: compounded interests Mr SMART would like to have 50 000 € by 3 years. So he saves a certain amount of money, invested once, today, on a bank account. The annual interest rate is 6%. How much will he have to put today? Exercise 6...
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  • Citibank - Basics of corporate finance
    annually, and is discounted at a rate of 7%. What is the bond's present value? $_____________________ v.05/13/94 p.01/14/00 v-1.1 4-18 VALUING FINANCIAL ASSETS ANSWER KEY 3. A bond matures in one year and pays interest at maturity. If the face value of the bond is $500,000, the...
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  • Ct1 Combined Materials Pack 2011
    pay £1, 000(1 + 0.4t ) at the end of year t , for t equal to 5, 10, 15, 20 and 25. It values these liabilities assuming that in the future there will be a constant effective interest rate of 7% per annum. An amount equal to the total present value of the liabilities is immediately invested in two...
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  • Marketing
    [ ] Illustration 6 Suppose you deposit Rs.1,000 annually in a bank for 5 years and your deposits earn a compound interest rate of 10% What will be value of the deposit at the end of 5 years? Assuming the each deposit occurs at the end of the year, the future value of this annuity? FVAn = Rs.1,000...
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  • Citibank Basis of Corporate Finance
    return on their investments. Suppose that a company is issuing zero-coupon bonds to raise funds for its operation. The bonds have a face value of $10,000 and a maturity of one year. What would an investor requiring a 9% return be willing to pay for one of the bonds today? Let's apply our present...
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  • Financial Modeling
    would you pay for a 10-year bond with a par value of $1 ,000 and a 7 percent coupon rate? Assume interest is paid annually. e. How much would you pay for a share of preferred stock paying a $5-per-share annual dividend forever? f. What will be the value in 7 years of $ 1 2,000 invested today? g...
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  • Additional Solved Sums, Financial Management, Prassanna Chandra
    The annual payment option would be the better alternative 15. What is the present value of an income stream which provides Rs.30,000 at the end of year one, Rs.50,000 at the end of year three , and Rs.100,000 during each of the years 4 through 10, if the discount rate is 9 percent...
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  • International Finance
    the one-period interest rates today are r is 5 percent and r∗ is 10 percent. Also, you are given that in the next period the spot rate will either be usd/gbp 2.2 or usd/gbp 1.8. (a) What is the value today of a one-period put option on the gbp that has a strike price of usd/gbp 1.9? (b) Suppose that...
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  • Reputation Management
    discount rate is 11 per cent. What would be your choice? Will your answer change if Rs 2,310 is paid in the beginning of each year for 5 years? 8. Compute the present value for a bond that promises to pay interest of Rs 150 a year for thirty years and Rs 1,000 at maturity. This first interest payment is...
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  • Financial Maths
    : PV  FV n (1  i) COMPOUNDING NOW SHOWS THAT “LARGE” SUMS TO BE PAID LATER ARE WORTH ONLY “SMALL” SUMS NOW What is the present value of $1 million to be paid in 100 years’ time if the interest rate is 15% pa? Financial Math Support Materials Page 27 of 85 PRESENT VALUE...
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  • Financial Management
    , 00, 000 44. (a) R = Since PV0 = R (PVIFAk, n) = = Rs.16,273.79. PVIFA 6.145 45. (b) i. Present Value of Rs.20,000 received annually for 15 years at 15% per annum rate of interest. PV = 20,000 x 5.847 = Rs.1,16,940 ii. Present Value of lumpsum payment of Rs.1,50,000 is 1,50,000. As, the...
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  • Investment Banking and Financial Services
    the end of the year, we would have 1000 x (1.00217) 52 = 1119.315 1119.315 − 1000 = 11.93% = 11.93% 1000 The effective annual interest rate on the 2nd CD is lower than that of the first CD. 208 Part II 20. Issue price = Face value N ⎞ ⎛ i 1+ ⎜ x 100 365 ⎟ ⎝ ⎠ 15, 00, 000...
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  • Class Notes
    Inflation • If you invest $1 in a bank deposit offering an interest rate of r = 10%, you are promised $1 × (1+r) = $1.10 in one year. • However, what – you will be able to purchase in one year with $1.10 is less than what – you are able to purchase today with $1.10 because of inflation. • Suppose...
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  • Content of Cases for Bba of Banking University
    from this analysis? 7. In discussing a possible loan with the firm’s banker, Knight learned that the bank would be willing to lend Office Mates up to $5,000,000 for one year at a 10 percent nominal, of stated rate. However, Knight failed to ask the banker about the specific terms of the loan. Assume...
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