Calculate the present value of your payments to the bank

Assignment Help Financial Management

Reference no: EM131970734

A local bank advertises the following deal: Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever.

a. Calculate the present value of your payments to the bank if the interest rate available on other deposits is 6.75%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $

b. What is the present value of a $100 perpetuity deferred for 10 years if the interest rate available on other deposits is 6.75%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $

c. Is this a good deal? Yes No

Reference no: EM131970734

Questions Cloud

What will be the companys return on equity : Pacific Packaging's ROE last year was only 5%; but its management has developed. If the changes are made, what will be the company's return on equity?

What is ramsays cost of capital to use in the analysis : What is Ramsay's cost of capital to use in the analysis? Calculate the expected sale price of the restaurant at the end of year 10.

Explain what is correct closing entry for expense accounts : The Retained Earnings account has credit balance of $40,000 before closing entries are made. Explain what is the correct closing entry for the expense accounts?

Approximate one year japanese interest rate : If U.S. annual interest rates are 4%, what must be the approximate one year Japanese interest rate if interest rate parity holds d

Calculate the present value of your payments to the bank : Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever.

Compute the total merchandise available for sale-at cost : Compute the Total merchandise available for sale-at cost and at retail, Cost complement, Ending retail book value of inventory, Stock shortage and Gross profit.

Contribution margin per unit : Product A has a contribution margin per unit of $500 and required 2 hours of machine time. Product B has a contribution margin per unit of $1000 and requires 5

What is the monthly payment if amortized monthly : Loan amount is $1000, 000. The interest rate is 8% on an annual basis. This is a fully amortizing over 30 years.

Generate in order to reach the break-even point : If fixed costs are $165500, how many dollars of revenue must the company generate in order to reach the break-even point?

User Account

All Pages