Money in other investments with equal risk

Assignment Help Financial Management
Reference no: EM13875947

You have a chance to buy an annuity that pays $10,000 at the beginning of each year for 10 years. You could earn 5.75% on your money in other investments with equal risk. What is the most you should pay for the annuity?

$74,480.54

$78,763.17

$130,270.64

$137,761.20

Reference no: EM13875947

Questions Cloud

What is maximum price you should be willing to pay for bond : You are considering the purchase of a 20-year, non callable bond with a coupon rate of 9.0%. The bond has a face value of $1,000, and it makes semi annual interest payments. If you require an 12% nominal yield to maturity on this investment, what is ..
Number of periods of a single payment : If you deposit money today in an account that pays 8.5% annual interest, how long will it take to double your money? Round your answer to the nearest whole number
Interest rate on single payment : Your parents will retire in 14 years. They currently have $300,000, and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?
Semi annual bonds outstanding-what is the yield to maturity : Signature Sweets, Inc. has 10 percent semi annual bonds outstanding with 20 years to maturity. The latest quote on these bonds is 120.00 percent of the face value. What is the yield to maturity?
Money in other investments with equal risk : You have a chance to buy an annuity that pays $10,000 at the beginning of each year for 10 years. You could earn 5.75% on your money in other investments with equal risk. What is the most you should pay for the annuity?
How you make or lose money by taking naked position on one : Explain the advantages and disadvantages to entering into a forward contract, and how you make or lose money by taking a naked position on one. Discuss issues of liquidity and your ability to tailor the contract to your needs in terms of delivery dat..
What can an employer do to protect itself : How might a work force reduction create age discrimination claims? What can an employer do to protect itself from these types of claims
What is the effective annual rate on loan : Suppose National Bank offers to lend you $10,000 for one year at a nominal annual rate (annual percentage rate) of 8.00%, but you must make interest payments at the end of each quarter and then pay off the $10,000 principal amount at the end of the y..
Explain the term qualified individual with a disability : Fully explain the term "qualified individual with a disability." What are the defenses available to an employer under the ADA

Reviews

Write a Review

Financial Management Questions & Answers

  Benefit by using activity based costing

Evaluate and discuss whether Boeing could benefit by using Activity Based Costing (ABC). The discussion should include what factor(s) influenced your decision, the ramifications of implementing ABC in the international business environment, and how y..

  Down payment plus equal monthly payments

A car is financed as follows: $2,000 as down payment plus equal monthly payments at 8% annual interest rate compounded monthly for 3 years. Original price of the car was $12,500. It is expected that maintenance costs are going to be $700 in the first..

  Preferred stock rate of return

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 12% of par, and a current market price of (a) $60.00, (b) $88.00, (c) $113.00, and (d) $132.00?

  Analysis indicate to the firms managers

Technology Corp. is considering a $260,000 investment in a new marketing campaign which they anticipate will provide annual cash flows of $54,000 for the next 6 years. The firm has a 10% cost of capital. What should the analysis indicate to the firm'..

  Absolute deviation and the mean square error

Discuss the mean absolute deviation (MAD) and the mean square error (MSE). Which do you think is a better indicator of the accuracy of a forecasting method and why?

  State the intrinsic value and the speculative premium

State the intrinsic value and the speculative premium for the call and put options. Why is the speculative premium so small for each option - Use the Black-Scholes OPM to find C.

  What is the earnings and dividend per share figure

Draiman, Inc., has sales of $600,000, costs of $258,000, depreciation expense of $63,500, interest expense of $30,500, and a tax rate of 40 percent. The firm paid out $43,500 in cash dividends and has 55,000 shares of common stock outstanding. What i..

  What was its charge for depreciation and amortization

Talbot Enterprises recently reported an EBITDA of $9.0 million and net income of $2.7 million. It had $3.6 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? Enter your answer in do..

  What is the pre-tax cost of debt for the newly-issued bonds

Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070 each. Crandal's flotation expense on the new bonds will be $50 per b..

  Accumulate fund for retirement by making deposits

A person aged 30 wishes to accumulate a fund for retirement by making deposits of $100 at the beginning of each month for 15 years followed by deposits of $200 at the beginning of each month for the next 15 years. Starting at age 65 withdrawals will ..

  Role of consultant with ten years experience in public funds

You are in the role of a consultant with ten years experience in the public financial management industry. A group of 20 civic leaders are considering forming a new task force and have asked you to prepare a proposal on whether they should build a fa..

  Calculate with explanation the unit costs of the souvenirs

Calculate with explanation the unit costs of the souvenirs. You should state your assumption, if any and determine the priceof the souvenirs and explain any other information that might be relevant for deciding the price

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