1. You have the choice of receiving $80,000 now or $33,000 now and another $56,000 four...

1. You have the choice of receiving $80,000 now or $33,000 now and another $56,000 four years from now. In terms of today's dollar, which choice is better and by how much? Money is worth 4.8% compounded annually.

Which choice is better?

A. The choice of $80,000 now is better.

B. They are equal in value.

C. The choice of $33,000 now and $56,000 in four years is better.

2. Jane is purchasing a membership in a fitness centre. She can pay either $300 now or pay $190 now, $110 in nine months, and $80 in fourteen months. Which option is better if money is worth 7.7% compounded monthly?

Which choice is better?

A. They are equal in value.

B. The choice of $300 now is better.

C. The choice of $190 now, $110 in 9 months and $80 in 14 months is better.

Expert Solution

1. Present value of future payments= (33000+(56000/(1.048)^4)= 79424

I will be willing to select $80000 now because it is having a higher present value

Correct answer will be (A) the choice of $80000 now is better.

2. The net present value of future payment is 283 so I will be accepting $300 now.

Correct answer is option (B)

jeff jeffy answered 2 years ago

1. Suppose you just won the state lottery, and you have a choice between receiving $2,550,000...

1. Suppose you just won the state lottery, and you have a choice between receiving $2,550,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes. 2. Your girlfriend just won the Florida lottery. She has the choice of $15,000,000 today or a 20-year annuity of $1,050,000, with the first payment coming one year from today. What rate of return is built into...

You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or...

You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or putting it in a bank account for 5 years that pays you 5% per annum. Calculate the opportunity cost of spending money now?

1. Suppose you have an investment that costs $80,000 at the beginning of the project, and...

1. Suppose you have an investment that costs $80,000 at the beginning of the project, and it generates $30,000 a year for four years in positive cash flows. The cost of capital is 12%. The IRR of the project is 18.45% and the NPV is about $11,120. The IRR model assumes that at the end of the first year you can invest the $30,000 at ________. a. 12.00% b. a rate greater than the IRR c. rate less than the cost...

You are given the choice between receiving $100,000 today or $100,000 in one year. Which of...

You are given the choice between receiving $100,000 today or $100,000 in one year. Which of the following statements is accurate? Group of answer choices You would prefer to receive $100,000 today, as you could invest the money and in one year have much more than the original $100,000. You would prefer to receive $100,000 today, as the present value of receiving $100,000 in one year is much less than $100,000. You would prefer to receive $100,000 today due to...

Entries for Installment Note Transactions On January 1, Year 1, Bryson Company obtained a $33,000, four-year,...

Entries for Installment Note Transactions On January 1, Year 1, Bryson Company obtained a $33,000, four-year, 8% installment note from Campbell Bank. The note requires annual payments of $9,963, beginning on December 31, Year 1. a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Note: Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers. In Year 4, round the amount in the Decrease...

You will be receiving the following payments from a friend -- $100 one year from now,...

You will be receiving the following payments from a friend -- $100 one year from now, $145 two years from now, and $125 three years from now. Calculate the present value of these payments given that the rate of interest is 6% per year. Also, calculate the future value of the payments in year three.

You have borrowed $33,000 to be repaid with five equal annual installments. The interest rate is...

You have borrowed $33,000 to be repaid with five equal annual installments. The interest rate is 9% per year. What is the annual payment? What is the total interest payment for year 4 of the loan? What is the total interest payment over the life of the loan?

Machinery purchased for $56,000 by Eggo Corp. on January 1, 2013, was originally estimated to have...

Machinery purchased for $56,000 by Eggo Corp. on January 1, 2013, was originally estimated to have an eight-year useful life with a residual value of $4,000. Depreciation has been entered for five years on this basis. In 2018, it is determined that the total estimated useful life (including 2018) should have been 10 years, with a residual value of $4,500 at the end of that time. Assume straight-line depreciation and that Eggo Corp. uses IFRS for financial statement purposes. Required...

Stan wants to have $80,000 available in four years. What size quarterly deposits does Stan have...

Stan wants to have $80,000 available in four years. What size quarterly deposits does Stan have to make into an account that pays 12.8% annual interest (APR), compounded quarterly, to accomplish his goal? Assume the first deposit is made in one quarter. $1,744.52 $4,135.95 $6,466.64 $3,906.64 Holly wants to have $40,000 available in year 2024. Holly plans to make annual deposits into an account paying 12.3% (APR) in years 2019 through 2021. What size annual deposits does Holly need to...

Take the current country you are living in and compare with another country of your choice...

Take the current country you are living in and compare with another country of your choice and compare the following aspects: Poverty Income Inequality Furthermore, explain how globalization has either helped increase or decrease the poverty and inequality in each country.

Question