Question
In: Finance
Lida has been awarded a scholarship that will pay $2,500 one year from now. However, Lida...
Lida has been awarded a scholarship that will pay $2,500 one year from now. However, Lida really needs the money today, and has decided to take out a loan. If the interest rate is 8 percent, how much can Lida borrow so that the scholarship will just pay off the loan?
Solutions
Expert Solution
| Here, $2500 is the FV after 1 year. The amount Lida | |
| can borrow is the PV of the $2500 discounted at 8%. | |
| Amount that can be borrowed = 2500*1.08 = | $ 2,700 |
| Answer: $2,700 |
jeff jeffy answered 2 years agoRelated Solutions
A scholarship endowment has a balance of $500,000. Five 1-year scholarships are to be awarded each...
A scholarship endowment has a balance of $500,000. Five 1-year
scholarships are to be awarded each year, with the first
disbursements of $2,500 per scholarship coming on year from now.
The endowment earns a 6% annual interest. If the scholarships are
to be offered in perpetuity and the scholarship board wishes to
raise the amount of the scholarships by a constant percentage
amount each year, what amount of growth is feasible each year?
Calculate the tax liability of a corporation...
Your friend wants to borrow $2,500 and pay you back the $2,500 in a year from...
Your friend wants to borrow $2,500 and pay you back the $2,500
in a year from now. You agree to the loan
but tell your friend he must pay you $500 up-front.
a) What is the annual effffective rate of interest you have
charged your friend?
b) Before your friend agrees to the deal, he gets a letter in
the mail saying he qualifified for a a credit card
from McMaster Bank with a $2,500 limit which charges an annual...
An investment is scheduled to pay $1,000 one year from now; $2,000 two years from now;...
An investment is scheduled to pay $1,000 one year from now;
$2,000 two years from now; $3,000 three years from now, and this
pattern is expected to remain the same in perpetuity (i.e., $1,000
on t=4; $2,000 on t=5; $3,000 on t=6; etc.). If the discount rate
on the project is 8% (effective annual rate), what is the present
value of the investment.
A. $79,080
B. $75,050
C. $28,306
D. $24,360
You are the recipient of a gift that will pay you $25,000 one year from now...
You are the recipient of a gift that will pay you $25,000 one
year from now and every year thereafter for the following 24 years.
The payments will increase in value by 2.5 percent each year. If
the appropriate discount rate is 8.5 percent, what is the present
value of this gift? STEPS FOR BAII PLUS CALCULATOR PLEASE!
A stock is expected to pay a dividend of $1.3 one year from now, $1.7 two...
A stock is expected to pay a dividend of $1.3 one year from now,
$1.7 two years from now, and $2.3 three years from now. The growth
rate in dividends after that point is expected to be 8% annually.
The required return on the stock is 12%. The estimated price per
share of the stock six years from now should be $_________.
Assume Gillette Corporation will pay an annual dividend of $ 0.68 one year from now. Analysts...
Assume Gillette Corporation will pay an annual dividend of $
0.68 one year from now. Analysts expect this dividend to grow at
11.6 % per year thereafter until the 5th year. Thereafter, growth
will level off at 1.9 % per year. According to the
dividend-discount model, what is the value of a share of Gillette
stock if the firm's equity cost of capital is 7.8 %?
Assume Gillette Corporation will pay an annual dividend of $ 0.68 one year from now. Analysts...
Assume Gillette Corporation will pay an annual dividend of $
0.68 one year from now. Analysts expect this dividend to grow at
12.3 % per year thereafter until the 55th year. Thereafter, growth
will level off at 1.8 %.per year. According to the
dividend-discount model, what is the value of a share of Gillette
stock if the firm's equity cost of capital is 8.6 %?
The value of Gillette's stock is $____________
Assume Gillette Corporation will pay an annual dividend of $ 0.65 one year from now. Analysts...
Assume Gillette Corporation will pay an annual dividend of $
0.65 one year from now. Analysts expect this dividend to grow at
11.9 % per year thereafter until the 6th year. Thereafter, growth
will level off at 2.4 % per year.
According to the dividend-discount model, what is the value of
a share of Gillette stock if the firm's equity cost of capital is
7.3 %?
Assume Gillette Corporation will pay an annual dividend of $ 0.65 one year from now. Analysts...
Assume Gillette Corporation will pay an annual dividend of $
0.65 one year from now. Analysts expect this dividend to grow at
11.9 % per year thereafter until the 6th year. Thereafter, growth
will level off at 2.4 % per year.
According to the dividend-discount model, what is the value of
a share of Gillette stock if the firm's equity cost of capital is
7.3 %?
Assume Gillette Corporation will pay an annual dividend of $ 0.66 one year from now. Analysts...
Assume Gillette Corporation will pay an annual dividend of $
0.66 one year from now. Analysts expect this dividend to grow at
11.2 % per year thereafter until the 44th year. Thereafter, growth
will level off at 1.9 % per year. According to the
dividend-discount model, what is the value of a share of Gillette
stock if the firm's equity cost of capital is 8.3%?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You have found the following historical information for the Daniela Company: year 1 year 2 year...
- Why does this not work? (Javascript) public void addStep(List<String> instructions) { Iterator<String> iter =...
- 1. a) why is it important to plan communications on any project? b) Why is it...
- Term paper on the evolution of artificial sweeteners and their effect on cancer.
- C# Programming; Create a Windows Form Application that displays a scrollable list of 10 random integers...
- What would be the consequences (positive or negative) of one world language? How does this relate...
- NPV AND IRR A store has 5 years remaining on its lease in a mall. Rent...
ADVERTISEMENT