1. Which would you prefer: $50,000 today, $100,000 ten years from now, or $150,000 twenty years...

1. Which would you prefer: $50,000 today, $100,000 ten years from now, or $150,000 twenty years from now? Answer this question in the face of each of three different scenarios: annual interest rates of 3%, 5%, and 7%.

Expert Solution

	scenario 1- when interest rate is 3%
	present value of 50000 today		50000/(1.03)^0	50000
	present value of 100000 10 years from now	pv = fv/(1+r)^n	100000/(1.03)^10	74409.39
	present value of 150000 20 years from now	pv = fv/(1+r)^n	150000/(1.03)^20	83051.36
1-	I would prefer 150000 20 years from now
	scenario 2- when interest rate is 5%
	present value of 50000 today		50000/(1.05)^0	50000
	present value of 100000 10 years from now	pv = fv/(1+r)^n	100000/(1.05)^10	61391.33
	present value of 150000 20 years from now	pv = fv/(1+r)^n	150000/(1.05)^20	56533.42
2-	I would prefer - 100000 10 years from now
	scenario 3- when interest rate is 7%
	present value of 50000 today		50000/(1.07)^0	50000
	present value of 100000 10 years from now	pv = fv/(1+r)^n	100000/(1.07)^10	50834.93
	present value of 150000 20 years from now	pv = fv/(1+r)^n	150000/(1.07)^20	38762.85
3-	I would prefer - 100000 10 years from now

jeff jeffy answered 11 months ago

Twenty years from now, you would like to purchase a cottage located on the shores of...

Twenty years from now, you would like to purchase a cottage located on the shores of your favourite lake. You expect that you will have $250,000 available at that time for this purchase. You could afford a home that is currently selling for ____ if the homes increase in value by 3% annually, but if the homes increase in value by 5% annually, you can only afford a home priced at _____ today.

4. Find the value twenty years from now of a $10,000 deposit today at an annual...

4. Find the value twenty years from now of a $10,000 deposit today at an annual interest rate of 0.1% per year if the interest on the account compounds daily.

You would like to save $5,000 today, in preparation for retirement 30 years from now. You...

You would like to save $5,000 today, in preparation for retirement 30 years from now. You have to choose between putting it into one of the two plans describe below: i) Pay no taxes toady, and put the money into an interest-bearing account. When you withdraw the money on retirement, you pay a 20% tax rate on the money taken from the account. (This is how an Individual Retirement Account, or, IRA works) ii) Pay a tax rate of 15%...

1) Eight years from now, you will be inheriting $100,000. What is this inheritance worth to...

1) Eight years from now, you will be inheriting $100,000. What is this inheritance worth to you today if you can earn 7.25 percent interest, compounded monthly? A) $50,947.00 B) $51,226.00 C) $52,150.00 D) $59,177.00 E) $56,087.63 2. You have been told that you need $32,000 today for each $120,000 you want when you retire 28 years from now. What rate of interest was used in the present value computation? Assume interest is compounded annually. A) 4.23 percent B) 4.53...

1) A debt of $5500 due five years from now and $5500 due ten years from...

1) A debt of $5500 due five years from now and $5500 due ten years from now is to be repaid by a payment of $2300 in two years, a payment of $4600 in four years, and a final payment at the end of six years. If the interest rate is 1.9% compounded annually, how much is the final payment? 2) Find the effective rate of interest that corresponds to 14% annual rate compounded continuously. re=. % (Round to two...

Cost of $50,000 in 2024 (four years from today).

Cost of $50,000 in 2024 (four years from today).A.) How much will you need to set aside for 48 months at 6% nominal interest / year, compounded monthly, in order to pay the $50,000?B.) Make 24 monthly payments at 6% interest, what are the monthly payments?

You would like to contribute $50,000 towards your grandchild’s college education 15 years from now. How...

You would like to contribute $50,000 towards your grandchild’s college education 15 years from now. How much money must you set aside today for this purpose if you believe you can earn 7% per annum on your investment? (Show calculation) You are considering purchasing a 15-year 8% unsecured bond at a price of $960: How much is the bond’s face value? How much is the bond’s coupon? What is the bond’s current yield?

Question 1: Answer the following a)Which would you prefer? (a) $1,000 a year for 10 years,...

Question 1: Answer the following a)Which would you prefer? (a) $1,000 a year for 10 years, or (b) $800 a year for 15 years at 5% interest? (Chapter 17) (10%) B) Which would you prefer? (a) $1,000 a year for 10 years, or (b) $800 a year for 15 years at 15% interest? (Chapter 17) (10%)

How much would you have to invest today to receive: a. $100,000 in 6 years at...

How much would you have to invest today to receive: a. $100,000 in 6 years at 12 percent? b.$100,000 in 15 years at 12 percent? c.$10,000 at the end of each year for 25 years at 12 percent d.$75,000 at the end of each year for 25 years at 12 percent?

You graduated from Loyola two years ago, and you are now earning a salary of $50,000...

You graduated from Loyola two years ago, and you are now earning a salary of $50,000 per year. The total cost of your Loyola education was $200,000. You are now thinking about earning an MBA degree. Because of your excellent education at Loyola, you are eligible for the one-year, accelerated program at Global University, which has a cost of $120,000 for tuition, room, board, books, etc. To earn the MBA, you would have to quit your job and study full-time....

Question