You are to receive an end-of-year bonus of $50,000 increasing by $1000 for each of the...

You are to receive an end-of-year bonus of $50,000 increasing by $1000 for each of the next ten years. If MARR is 12% and inflation rate is anticipated to be 2%, what will be purchasing power?

Expert Solution

	(a)	(b)	(c ) = (a)-(b)	(d)	*(e ) = (c )(d)**
Year	Bonus	Inflation Adjusted Bonus	Increase in Purchasing Power	DF @ 12%	Present Value of the increase/decrease in Purchasing power
1	50000	50,000.00	-	0.892857	-
2	51000	51,000.00	-	0.797194	-
3	52000	52,020.00	-20.00	0.71178	-14.24
4	53000	53,060.40	-60.40	0.635518	-38.39
5	54000	54,121.61	-121.61	0.567427	-69.00
6	55000	55,204.04	-204.04	0.506631	-103.37
7	56000	56,308.12	-308.12	0.452349	-139.38
8	57000	57,434.28	-434.28	0.403883	-175.40
9	58000	58,582.97	-582.97	0.36061	-210.22
10	59000	59,754.63	-754.63	0.321973	-242.97

Decrease in purchasing power:	-992.97

jeff jeffy answered 2 years ago

a. You will receive an annuity payment of $1,200 at the end of each year for...

a. You will receive an annuity payment of $1,200 at the end of each year for 6 years. What will be the total value of this stream of income invested at 7% by the time you receive the last payment? b. How many years of investing $1,200 annually at 9% will it take to reach the goal of $12,000? c. If you plan to invest $1,200 annually for 9 years, what rate of return is needed to reach your goal...

You invest $50,000 now and receive $10,000 per year for 15 years starting at the end...

You invest $50,000 now and receive $10,000 per year for 15 years starting at the end of the first year. What is the discounted payback period? Use i = 9% annual rate compounded annually. Give the discounted payback period between two consecutive integers.

Suppose you receive $100 at the end of each year for the nextthree years.What...

Suppose you receive $100 at the end of each year for the next three years.What is the future value in three years at 8% interest?

A) You are expecting to receive $300 at the end of each year in years 3,...

A) You are expecting to receive $300 at the end of each year in years 3, 4, and 5, and then 500 each year at the end of each year in years 10 through 25, inclusive. If the appropriate discount rate is 9.2 percent, for how much would you be able to sell your claim to these cash flows today? B) You are paying an effective annual rate of 12.93 percent on your credit card. The interest is compounded monthly....

Consider two investments: Invest $1000 and receive $110 at the end of each month for the...

Consider two investments: Invest $1000 and receive $110 at the end of each month for the next 10 months. Invest $1200 and receives $130 at the end of each month for the next 10 months. If this were your money, and you want to earn at least 12% interest on your money, which investment would you make, if any? What nominal interest rate do you earn on each investment? (show all equations)

Suppose you receive $160 at the end of each year for the next three years. a....

Suppose you receive $160 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 you computed in(a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three...

Suppose you receive $100 at the end of each year for the next three years. a....

Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8% per annum (interest paid annually), what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in part (a)? c. Assume that no withdrawals are made from the savings account until the end of the third year. What is the interest component? d. Compute the...

Suppose you receive $100100 at the end of each year for the next three years. a....

Suppose you receive $100100 at the end of each year for the next three years. a. If the interest rate is 9 %9%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 9 %9% interest per year. What is the balance in the account at the end of each of...

You will receive $697 at the end each year in years 1 through 10, $2,024 in...

You will receive $697 at the end each year in years 1 through 10, $2,024 in years 11 through 20, and $2,547 in years 21 through 30. How much is all this worth today, if the required rate of return is 8%? GDebi, Inc. plans to issue 5.5 percent coupon bonds, with annual coupon frequency, 14 years to maturity and $1000 face value. If the prevailing market yield on bonds of similar riskiness and maturity is 6.1 percent, what would...

a 30 year loan of 1000 is repaid with payments at the end of each year....

a 30 year loan of 1000 is repaid with payments at the end of each year. Each of the first 10 payments equals the amount of interest due. Each of the next 10 payments equals 150% of the amount of interest due. Each of the last 10 payments is X. The lender charges interest at an effective annual rate of 10%. Calculate X. please explain, having much trouble with this problem, Thanks!

Question