Question
In: Finance
Axelrod Ltd. wishes to accumulate its cash so it will have $8.06 million sometime in the...
Axelrod Ltd. wishes to accumulate its cash so it will have $8.06 million sometime in the future. Independent of any financial information provided for Axelrod in its financial statements, assume they invest $1.15 million annually over 5 years, starting today, assuming a 4.5% per annum return. They stop investing after their 5th deposit of $1.15 million. They will then leave the accumulated funds in their account to grow until it reaches their goal of $8.06 million How many years in total will it take to reach their goal?
a. How many years from today will it take Axelrod to reach its goal? (Round up to the nearest year.) (4 points)
b. In a separate matter, the CEO, Bobbie Axelrod, wants to determine how much he must save for his son’s university education. His son will start university in 3 years and the cost is estimated to be $34,000 per year over 4 years (withdrawn at the beginning of each year). Assume Bobbie makes his first deposit into a savings account in one year and wants to make 3 equal annual deposits in total. If he earns 3% annually on his savings account, how large must his annual deposit be? (Round to the nearest dollar.) (4 points)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Axelrod Ltd. wishes to accumulate its cash so it will have $8.06 million sometime in the...
Axelrod Ltd. wishes to accumulate its cash so it will have $8.06
million sometime in the future. Independent of any financial
information provided for Axelrod in its financial statements,
assume they invest $1.15 million annually over 5 years, starting
today, assuming a 4.5% per annum return. They stop investing after
their 5th deposit of $1.15 million. They will then leave the
accumulated funds in their account to grow until it reaches their
goal of $8.06 million How many years in...
1) A young couple wishes to accumulate $35,000 at the end of four years so that...
1) A young couple wishes to accumulate $35,000 at the end of
four years so that they may make a down payment on a house. What
should their equal end-of-year deposits be accumulate the $35,000,
assuming a 6% rate of interest?
a. $7,718
b. $8,000
c. $6,915
d. $8,765
2) The future value of $3,000 deposited at 11% compounded
quarterly for each of the next six years is
a. $5,211
b. $5,611
c....
XYZ Ltd wishes to raise $20 million to fund its investment projects. d) The company is...
XYZ Ltd wishes to raise $20 million to fund its investment
projects.
d) The company is planning to issue 10-year semi-annual coupon
bonds with a coupon rate of 6% and a face value of $1,000. The
effective annual yield to maturity of investors is expected to be
8% per annum. Calculate the required number (expressed in integer)
of semi-annual coupon bonds to raise $20 million.
e) Alternatively, XYZ Ltd is looking into issuing 15-year
zero-coupon bonds with a face value...
Sunrise Industries wishes to accumulate funds to provide aretirement annuity for its vice president of...
Sunrise Industries wishes to accumulate funds to provide a
retirement annuity for its vice president of research, Jill Moran.
Ms. Moran, by contract, will retire at the end of exactly 12 years.
Upon retirement, she is entitled to receive an annual end-of-year
payment of $42,000 for exactly 20 years. If she dies prior to the
end of the 20-year period, the annual payments will pass to her
heirs. During the 12-year “accumulation period,” Sunrise wishes to
fund the annuity by...
Sunrise Industries wishes to accumulate funds to provide a retirement annuity for its vice president of...
Sunrise Industries wishes to accumulate funds to provide a
retirement annuity for its vice president of research, Jill Moran.
Ms. Moran, by contract, will retire at the end of exactly 12 years.
Upon retirement, she is entitled to receive an annual end-of-year
payment of $42,000 for exactly 20 years. If she dies prior to the
end of the 20-year period, the annual payments will pass to her
heirs. During the 12-year “accumulation period,” Sunrise wishes to
fund the annuity by...
Obrien Group wishes to accumulate funds to provide a retirement annuity for its Director of Research,...
Obrien Group wishes to accumulate funds to provide a retirement
annuity for its Director of Research, Peter Alexander; Mr.
Alexander by contract will retire at the end of exactly 12 years.
On retirement, he is entitled to receive an annual end-of-year
payment of $42,000 for exactly 20 years. If he dies prior to the
end of the 20-year period, the annual payments will pass to his
heirs. During the 12-year 'accumulation period', Obrien wishes to
fund the annuity by making...
Sunrise Industries wishes to accumulate funds to provide a retirement annuity for its vice president of...
Sunrise Industries wishes to accumulate funds
to provide a retirement annuity for its vice president of
research, Jill Moran. Ms. Moran, by contract, will retire at the
end of exactly 12 years. Upon retirement, she is entitled to
receive an annual end-of-year payment of $ 42,000 for exactly 20
years. If she dies prior to the end of the 20-year period, the
annual payments will pass to her heirs. During the 12 year
"accumulation period," Sunrise wishes to fund the...
Bella Inc. wishes to accumulate funds to provide a retirement annuity for its Vice President of...
Bella Inc. wishes to accumulate funds to provide a retirement
annuity for its Vice President of Research, Edward Cullen. Mr.
Cullen by contract will retire at the end of exactly 20 years. On
retirement, he is entitled to receive an annual end-of-year payment
of $35,000 for exactly 30 years. If he dies prior to the end of the
30-year period, the annual payments will pass to his heirs. During
the 20-year ‘accumulation period’, Bella Inc. wishes to fund the
annuity...
Tweedledee Ltd and Tweedledum Ltd have identical expected operating cash flows of $600 million in perpetuity,...
Tweedledee Ltd and Tweedledum Ltd have identical expected
operating cash flows of $600 million in perpetuity, but Tweedledee
is financed entirely by equity, while Tweedledum’s capital
structure includes 30 percent debt and 70 percent equity finance.
Assume that the assumptions of a perfect capital market hold
(including the assumption of risk-free debt), the measured equity
beta for Tweedledee is 0.8, the yield on ten-year Government bonds
is 6 percent and the market risk premium is 7 percent. Each firm
has...
In 10 years, a firm will have annual cash flows of $100 million. Thereafter, its cash...
In 10 years, a firm will have annual cash flows of $100 million.
Thereafter, its cash flows will grow at the inflation rate of 3%.
If the applicable interest rate is 8%, estimate its value if you
will sell the firm in 10 years? What would this be worth today?
Show your work.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Dr C #1 An object with mass = 5 kg is oscillating on the end of...
- Calculate the value of a bond that matures in 13 years and has a $1,000 par...
- The documentary Gender Revolution implies that gender today—gender identities and categories—are vastly different today than they...
- 12. What is the payment in month 13 on a CAM loan for $250,000 with a...
- Which of the following is true of variable costing? It expenses administrative costs as costs of...
- Individual Age Gender (Male=1) Family Size Cigarettes/Day Alcohol/Day Total Claims 1 25 1 2 0 3...
- Festus and Fran have decided to buy a house. The purchase price is $175,000. They have...
ADVERTISEMENT