Finance question: 1.a) Mejia’s grandmother plans on giving him $25,000 at the end of each year...

Finance question:

1.a) Mejia’s grandmother plans on giving him $25,000 at the end of each year for the next 9 years. Assuming a discount rate of 7%, what is the present value of this sum?

b) If Lesly’s grandmother will give him $5,000 at the beginning of each year for the next 10 years, what is the present value of this sum if the discount rate is 10%?

Expert Solution

P =	Periodic Payments
r =	rate of interest
n =	no of periods

Ans 1 a)
Annuity PV Factor (End of Period) =	P [ 1 - ( 1 + r )^-n ]
	r

	25000* ( 1 - ((1 / (1 + 7%)^9)))
	7%

	11401.65644
	0.07

	162880.81

Ans 1 b)
Annuity PV Due (Beginning)=	P + ( P [ 1 - ( 1 + r )^-(n-1) ] / r )


	5000 + 5000 * ( 1 - ((1 / (1 + 10%)^(10-1))))/ (10%)


	33795.12

jeff jeffy answered 3 years ago

You will be receiving $25,000 at the end of each year for the next 20 years....

You will be receiving $25,000 at the end of each year for the next 20 years. If the correct discount rate for such a stream of cash flows is 10% then what is the present value of the cash flows?

George Robinson plans to invest $28,100 a year at the end of each year for the...

George Robinson plans to invest $28,100 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 9.8 percent. How much money will George have at the end of seven years? (Round factor values to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25.) Future value of investment

1.You want to finance a car for $25,000. You agree to a 5 year loan with...

1.You want to finance a car for $25,000. You agree to a 5 year loan with a monthly interest rate of 0.55 percent. What is your required monthly payment? 2.How are bond prices and interest rates related? Use the terms 'discount', 'par', and 'premium' in your explanation.

Discounted Tires plans to save $10,866, $20,585, and $27,782 at the end of each year for...

Discounted Tires plans to save $10,866, $20,585, and $27,782 at the end of each year for Years 1 to 3, respectively. If it earns 5 percent on its savings, how much will the firm have saved at the end of Year 3?

Miller's Hardware plans on saving $100, $150, and $400 at the end of each year for...

Miller's Hardware plans on saving $100, $150, and $400 at the end of each year for the next three years, respectively. How much will the firm save at the end of the 7th year if it can earn 2% on its savings? (2% is annual interest rate and assume annual compounding) [Please round your answer to the nearest whole number]

Miller's Hardware plans on saving $100, $150, and $350 at the end of each year for...

Miller's Hardware plans on saving $100, $150, and $350 at the end of each year for the next three years, respectively. How much will the firm save at the end of the 6th year if it can earn 4% on its savings? (4% is annual interest rate and assume annual compounding) [Please round your answer to the nearest whole number]

1-4 $25,000 per year (payments at the end of the year) 5-9 $20,000 per year (payments...

1-4 $25,000 per year (payments at the end of the year) 5-9 $20,000 per year (payments at the end of the year) Assume an interest rate of 6% compounded annually. Calculate the present value of the stream of cash flows above.

Explain four major sources of finance for projects giving the advantages and disadvantages for each.

1. Why is it important to know a person's blood type before giving him or her...

1. Why is it important to know a person's blood type before giving him or her a transfusion? 2. What are antigens and antibodies? How are they involved in the body's response to incompatible blood? 3. Describe the immune response that occurs when an individual receives a transfusion of incompatible blood. 4. People with blood type O are considered to be universal donors. That is, they can donate blood to all other blood types. Using your knowledge of blood types...

At the end of each of the next 8 years, you plan to put $25,000 in...

At the end of each of the next 8 years, you plan to put $25,000 in the bank. If the annual interest rate is 3%, what is the present value of this planned savings stream? What will the bank balance be at the end of the 8 year period? [Hint: once you know the present value of the savings stream, it's easy to work out the future value]

Question