Reference no: EM13878098
Future and Present Values, Spreadsheet Application
a. It is said (S. Branch Walker) that the Indian who sold Manhattan for $24 was a sharp salesman. If he had put his $24 away at 6 percent compounded semiannually, it would now be worth over $9 billion, and he could buy most of the now-improved land back! Assume that this seller invested on January 1, 1701, the $24 he received.
Required
1. Use Excel to determine the balance (in billions) of the investment as of December 31, 2009, assuming a 6 percent interest rate compounded semiannually. (Hint: Use the FV function in Excel.)
2. Carry out the same calculation using an 8 percent annual interest rate, compounded semiannually.
3. What would be the balances for requirements 1 and 2 if interest is compounded quarterly?
4. Assume that the account consisting of this investment had a balance of $9.5 billion as of December 31, 2009. How much would the total amount be on December 31, 2015, if the annual interest rate is 8 percent, compounded semiannually?
b. In 2000, Alex Rodriguez signed a 10-year, $252 million dollar contract with the Texas Rangers. Assume that equal payments would have been made each year to Alex and that the owner's cost of capital (discount rate) was 12 percent at the time the contract was signed. What is the present value cost of the contract to the owners as of January 1, 2000, the date the contract was signed, in each of the following independent situations?
Required
1. Alex received the first payment on December 31, 2000.
2. Alex received the first payment on January 1, 2000, the date the contract was signed.
3. Assuming the owner is in the 45 percent income tax bracket, calculate your answer for requirement 1.
|
Why is it important to have a social media policy in place
: What are some "best practices" to incorporate in a social media policy? Why is it important to have a social media policy in place
|
|
Design that shaft
: The shaft is drive shaft for a large bulk material conveyor.the gear receives 40hp and rotate at 120rpm.each chain sprocket delivers 20hp to one side of the conveyor. Use AISI 1020 cold-drawn steel. Design that shaft.
|
|
Personal professional development plan
: Personal Professional Development Plan: Competencies - How will your competencies as identified in the assessment benefit you in your selected career
|
|
Find the new equilibrium national income, consumption
: Find the new equilibrium national income, consumption, investment, and tax
|
|
How much would the total amount be on december
: How much would the total amount be on December 31, 2015, if the annual interest rate is 8 percent, compounded semiannually?
|
|
What is the numerical values of the multipliers
: Consider a national income model with the following consumption, investment, and tax functions C = 55 + 0.85YD , T = 20 + 0.05Y , I = 10 + 0.1Y - 8r - What is the numerical values of the multipliers
|
|
Difference between training and learning and development
: Companies with an old school mentality still consider training a human resource thing and have a mindset of "we'll do it when there's time." Can you explain the difference between training and learning and development
|
|
Fringe benefit tax - advice abc of its fbt consequences
: Analyze and then advice ABC of its FBT consequences arising out of the above information, including calculation of any FBT liability, for the year ending 31 March 2015
|
|
Find the equilibrium national income, consumption, and tax
: Assume a closed economy with the following national income model: Y = C + I + G0 , C = C0 + bY D , T = T0 + tY I = I0 + iY - Find the equilibrium national income, consumption, and tax
|