An investment promises the following payments: March 3 $1000; March 18 $2000; March 26 $3000. If the market interest rate is 5.16%, what is this investment value on March 28? ___________.What is this investment value on March 18? _____________. If you believe your required return for this investment should be 8.19%, how much are you willing to pay for this investment on March 1? _____________

An investment promises the following payments: March 3 $1000; March 18 $2000; March 26 $3000. If the market interest rate is 5.16%, what is this investment value on March 28? _____.What is this investment value on March 18? _. If you believe your required return for this investment should be 8.19%, how much are you willing to pay for this investment on March 1? _______

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

See similar textbooks

Similar questions

uestion 1: Solve the following TVM problems using Excel formulas. You MUST use Excel formulas (FV or PV) to receive credit. ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? C. Suppose you invest $ 570 monthly. What is the future value of the investment in 29 29 years, if interest at + 5% is compounded monthly? 5 6 7 8 19 20 21 22 23 24 25 26 27 28 29 Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A 国 W X
D3) Finance Calculate the price of an FRA (Forward Rate Agreement) that starts in 30 days and ends in 60 days (30F60), the 30-day rate is 8.50%, and the 90-day rate is 9.50%. Mathematically check that it is equivalent to invest 100 pesos for 60 days vs. Invest 100 pesos for 30 days at the 30-day rate and the result is to invest 30 days plus the Forward rate.
What is the equivalent uniform annual payment for the following investment if the interest rate is 10%? Populate the following table and compute the uniform annual payment. Show all work and provide a comment. [Hint: This problem is a mix of annuity, gradient, and a single future cash payment] ΕΟΥ Cash Flows 1 $4,000 2 $4,500 3 $5,000 4 $5,500 5 $6,000 60 $6,500 7 $7,000 00 8 $7,500 9 $8,000 10 $15,500 Annuity Gradient Future
Find the PV and FV of an investment that makes the following end-of-year payments. The interest rate is 8%. Year Payment 1 100 2 200 3 400 Rate = 8% To find the PV, use the NPV function: PV = Year Payment x (1 + I )^(N-t) = FV1 100 1.17 116.64 2 200 1.08 216.00 3 400 1.00 400.00 Sum = ?PV = ?FV of PV = ?
Q.13: You are offered an investment that requires you to put up $12,000 today in exchange for $40,000 15 years from now. What is the annual rate of return on this investment?
Q.11: You are considering a one-year investment. If you put up $1,250, you will get back $1,350. What rate is this investment paying?
Q # 2 : What is the present value of $1000 received in 8 years if the current opportunity rate of return is 7% ?
1. Given P = 45,000.00, ? = 0.02, m = 2, t = 4, find Is. 2. If the investment amounting to 45,000 earned an interest of 3,500 how much will be the maturity value?
One investment plan that you can buy on 1st December 2020 promises to give you certain payment of Rs.5000 on 1st December 2022. Then the payment will grow at 10% per annum. Six such payments will be made, and the last payment will be made on 1st December 2027. a)Draw the cash flow diagram. b)What is the price you would pay to buy such a product if your required rate of return is 10% per annum?c)What is the equivalent equal annual cash flow amount if the amount is paid for 7 years (1st December 2021 to 1st December 2027) in seven equal installments instead of six growing installments?
Suppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one year? b. Having $650 in one year is equivalent to having what amount today? c. Which would you prefer, $650 today or $650 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $650 today is equivalent to having what amount in one year? It is equivalent to $____. (Round to the nearest cent.)
An investment promises two payments of $1000, on dates 60 and 90 days from today. What price will an investor pay today a) If her required return is 10%? b) If her required retun is 1? Short Answer Toolbar.naigation !!
which of the following investments that pay will $5000 in 12 years have a higher price today? A. The security that earns an interest rate it 8.25% B. The security that earns an interest rate of 5.50%?