Maximum amount that someone should be willing to pay

Assignment Help Financial Management

Reference no: EM131543647

Your parents set up a trust for you that you will not have access to until your 30th birthday, which is exactly 9 years from today. By prior arrangement, the trust will be worth exactly $200,000 on your 30th birthday. You need cash today and are willing to sell the rights to that trust today for a set amount. If the discount rate for such a cash flow is 12%, what is the maximum amount that someone should be willing to pay you today for the rights to the trust on your 30th birthday.

Reference no: EM131543647

Questions Cloud

Create sample him budget for small-medium sized hospital : create a sample HIM budget for a small/medium sized hospital with 20-25 FTEs in the HIM Department.

What is the minimum she needs to invest quarterly to ensure : what is the minimum she needs to invest quarterly to ensure she has the funds to purchase the car in three years?

Prepare a budget based upon the amount of cash flow : You are trying to prepare a budget based upon the amount of cash flow that you will have available 5 years from now.

What must expected return on the market be : A stock has an expected return of 16.5 percent, its beta is 1.50, and the risk-free rate is 4.5 percent. What must the expected return on the market be?

Maximum amount that someone should be willing to pay : what is the maximum amount that someone should be willing to pay you today for the rights to the trust on your 30th birthday

Exactly equal to the present value of annual installments : What is the amount of the lump sum that would be exactly equal to the present value of the annual installments?

Replace machine with an identical model : How much needs to be set aside at the end of each year to replace machine with an identical model eight years from now assuming machine cost does not change.

What is company cost of retained earnings : What is the company’s before-tax cost of debt, assuming they issue new debt? What is the company’s cost of retained earnings?

Thinking about opening a soccer camp : Coolplay Corp. is thinking about opening a soccer camp in southern California. Calculate the net present value of the project.

User Account

All Pages