Question
In: Accounting
On May 15, 2018 Phil Brubaker reached a settlement on a long overdue contract. The settlement...
On May 15, 2018 Phil Brubaker reached a settlement on a
long
overdue contract. The settlement results in Phil receiving a
total of $2,000,000 -- scheduled over 5 annual payments of
$400,000 each. The first payment starts on May 15, 2021, with
the remaining 4 payments following on May 15, 2022, May 15,
2023, May 15, 2024, and May 2025.
Phil wants to know the present value of his settlement today
on
May 15, 2018, at a 4% interest rate. Show all calculations.
Solutions
Expert Solution
- All working forms part of the answer
|
Period |
Date |
Amount received |
Present Value factor at 4% |
Present Values |
|
[A] |
[B = 1/(1.04)Period] |
[C = A x B] |
||
|
0 |
15-May-18 |
$ - |
1 |
$ - |
|
1 |
15-May-19 |
$ - |
0.961538462 |
$ - |
|
2 |
15-May-20 |
$ - |
0.924556213 |
$ - |
|
3 |
15-May-21 |
$ 400,000 |
0.888996359 |
$ 355,599 |
|
4 |
15-May-22 |
$ 400,000 |
0.854804191 |
$ 341,922 |
|
5 |
15-May-23 |
$ 400,000 |
0.821927107 |
$ 328,771 |
|
6 |
15-May-24 |
$ 400,000 |
0.790314526 |
$ 316,126 |
|
7 |
15-May-25 |
$ 400,000 |
0.759917813 |
$ 303,967 |
|
Present Value of his settlement Today on May 15, 2018 |
$ 1,646,384 |
|||
- Answer = $ 1,646,384 is the Present Value of his settlement Today on May 15, 2018
ekkarill92 answered 2 years agoRelated Solutions
A Treasury Strips is sold for settlement on May 15, 2018. · Annual Coupon Rate 0%...
A Treasury Strips is sold for settlement on May 15, 2018.
· Annual Coupon
Rate 0%
· Semi-annual
compounding
· Maturity Date:
15 October 2018
· Annual
Yield-to-Maturity: 6%
· Face Value:
$100
· Day Count
Convention: actual/actual
Calculate the full price of the zero-coupon
bond
Hint: Note that in the case of a zero-coupon bond (with $100 par
value), our bond pricing formula is simply
where T is the time to maturity in years and P(T) is the (full)...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $410 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred
during the year
$
50
$
150
$
45
Estimated costs to complete as
of...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $410 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
Costs incurred during the year $ 50
Estimated costs to complete as of December 31 $200
2019 Costs incurred during...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $310 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred during the year
$
70
$
60
$
30
Estimated costs
to complete as of...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $310 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred during the year
$
70
$
60
$
30
Estimated costs to complete as of...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $260 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred during the year
$
60
$
80
$
65
Estimated costs
to complete as of...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $260 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred during the year
$
60
$
80
$
65
Estimated costs
to complete as of...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $400 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred
during the year
$
90
$
60
$
80
Estimated costs to complete as
of...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $220 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred
during the year
$
40
$
80
$
50
Estimated costs to complete as
of...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a
long-term construction contract to build a baseball stadium in
Washington, D.C., for $430 million. The expected completion date is
April 1, 2020, just in time for the 2020 baseball season. Costs
incurred and estimated costs to complete at year-end for the life
of the contract are as follows ($ in millions):
2018
2019
2020
Costs incurred during the year
$
40
$
170
$
60
Estimated costs to complete as of...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- identify one intrapersonal relationship and evaluate its component.
- Using Python in vs code: The distribution of letters in a document has a distinctive and...
- Why is De Beers exploring the diamond reselling market? How does the creation of IIDV affect...
- programming in Python The body mass index (BMI) is calculated as a person’s weight (in lb)...
- 1. Show the steps in merging A and B into C where A= 8, 12, 19,...
- 1. Given the following information, determine the beta coefficient for Stock L that is consistent with...
- Generate the first ten rows of Pascal triangle using MATLAB. Post code in the response
ADVERTISEMENT