At what interest rate would this be fair deal

Assignment Help Financial Management
Reference no: EM131980789

Curly’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $26,000 per year forever. A representative for Curly’s tells you the policy costs $510,000. Required: At what interest rate would this be a fair deal? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Interest rate %

Reference no: EM131980789

Questions Cloud

What is the after-tax salvage value of the asset : The asset has an acquisition cost of $6,000,000 and will be sold for $2,000,000 at the end of the project. what is the after-tax salvage value of the asset.
Suffered isolation at hands of the international community : Decades before the 2012 revolution, Libya suffered isolation at the hands of the international community,
Manufacturing company sells multiple products : A manufacturing company sells multiple products. If Product A is dropped, the overall company would be better off or worst off by.
Repurchase agreements and federal funds : Briefly describe the main differences between the following money market securities. Repurchase agreements and federal funds.
At what interest rate would this be fair deal : A representative for Curly’s tells you the policy costs $510,000. Required: At what interest rate would this be a fair deal?
What is the risk-free interest rate expressed : What is the risk-free interest rate expressed as an effective annual yield?
Net outlay to establish the entire portfolio : Your net outlay to establish the entire portfolio is $99.1. The stock pays no dividends. What is the risk-free interest rate?
Depreciation expense be each year under each method : Charlene is evaluating a capital budgeting project that should last for 4 years. What would the depreciation expense be each year under each method?
Explain the various stock valuation methods : Explain the various stock valuation methods and the relevant factors that affect the valuation process.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the npv of the project

What is the net cash flow of the project each year?What is the NPV of the project?

  What is the market price of these bonds

Fort Mill Inc. has issued eight-year bonds with a coupon of 6.375 percent and semiannual coupon payments. The required rate of return on such bonds is 7.65 percent. What is the market price of these bonds?

  Weight of each stock in minimum variance portfolio

Consider two stocks, Stock D, with an expected return of 21 percent and a standard deviation of 37 percent, and Stock I, an international company, with an expected return of 7 percent and a standard deviation of 17 percent. The correlation between th..

  Three distinct reasons for organizing society around laws

Three distinct reasons for organizing society around laws were “order, fairness, and “predictability.”

  Long-term financing needed-what was total long-term debt

At year-end 2013, Wallace Landscaping’s total assets were $1.4 million and its accounts payable were $415,000. Sales, which in 2013 were $2.6 million, are expected to increase by 30% in 2014. What was Wallace's total long-term debt in 2013? How much ..

  What is the total cost of this situation

Peter runs a mail-order business for gym equipment from his facility in Ponce. Annual demand for the PuertoFlexers (the best seller) is 25,000 in the US. Assume that the year has 360 days. He sells each product for $350, earning a markup of 20%, incl..

  Calculate economic value of the stock

At the end of the year 2016 Brown Bear Corporation paid dividends $4.12 per share. Calculate the economic value of the stock now (end of the Year 20

  An irrigation system is being considered with first cost

An irrigation system is being considered with a first cost of $200,000 with (current) annual maintenance costs of $2,000. The irrigation system is expected to bring $22,000 per year in additional (current) revenues. Using the current cash flows, find..

  What is the profit of this strategy

What is the payoff of this strategy? What is the profit of this strategy?

  What is the bond coupon rate

Sky Enterprises outstanding bonds have a 25 year maturity and a $1000 par value. Their yield to aturity is 9.25%. They pay coupon payments semiannuallym and they are selling at a price of $850. What is the bond's(annual) coupon rate?

  Calculate the price per share

Calculate the price per share if its equity cost of capital is 10% per year assuming that dividends are paid at the end of the year.

  Jasper metals is considering installing new molding machine

Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $73,000 a year for 7 years.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd