What is the present value and why does future value increase

Assignment Help Financial Econometrics

Reference no: EM13647000

Q1. Present Value and Multiple Cash Flows

Conoly Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent?

Q2. Calculate EAR

Find the EAR in each of the following cases:

Stated Rate, APR (%)	Number of Times Compounded (m)	Effective Rate, EAR (%)
7	Quarterly (m = 4)	7.19
16	Monthly (m = 12)	17.23
11	Daily (m = 365)	11.63
12	Infinite (m = ∞)	12.75

Q3. Calculating Number of Periods

One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a repayment schedule of $700 per month. You will charge 1.3 percent per month interest on the overdue balance. If the current balance is $21,500, how long will it take for the account to be paid off?

Q4. Future Value

What is the future value in six years of $1,000 invested in an account with a stated annual interest rate of 9 percent?

Why does the future value increase as the compounding period shortens?

Q5. Calculating Annuities

You are planning to save for retirement over the next 30 years. To do this, you will invest $800 a month in a stock account and $350 a month in a bond account. The return of the stock account is expected to be 11 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with an 8 percent return. How much can you withdraw each month from your account assuming a 25-year withdrawal period?

Q6. Present Value and Interest Rates

What is the relationship between the value of an annuity and the level of interest rates? Suppose you just bought a 15-year annuity of $6,800 per year at the current interest rate of 10 percent per year. What happens to value of your investment if interest rates suddenly drop to 5 percent? What if interest rates suddenly rise to 15 percent?

Q7. NPV versus IRR

Consider the following cash flows on two mutually exclusive projects for the Phuket Recreation Corporation (PRC). Both projects require an annual return of 14 percent.

Reference no: EM13647000

Questions Cloud

Define the hydrolysis of one ester group in tannins by caco3 : 1. Write an equation describing the hydrolysis of one ester group in tannins by CaCO3. 2. How would longer roasting time of green coffee beans effect its caffeine content

How fast did you toss the ice cream : Cosmonaut Andrei, your co-worker at the International SpaceStation, tosses a banana at you at a speed of 17 m/s. At exactly the same instant, How fast did you toss the ice cream

Explain the final temperature of hot water : What is the final temperature when 12.6g of hot water at 55.9 degrees Celsius is mixed with 35.1g of cool water at 22.3 degrees Celsius. Assume this takes place in an insulated container.

Find how fast were you going as you exited the inter section : You are driving a car at the 25-mi/h speed limit when you observethe light at the intersection 70 m infront of you turn yellow. How fast were you going as you exited the inter section

What is the present value and why does future value increase : Conoly Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent?

Estimate how does this shielding work : electronic devices are usually enclosed in metal boxes, onefunction of the box is to shield the inside components fromexternal electric fields. how does this shielding work

Obtain the work done by the force of friction on flight bag : A flight attendant pulls her 74 N flight bag a distanceof 318 m along a levelairport floor at a constant velocity. Find the work done by the force of friction on the flight bag

Depict a partial mo diagram between px-orbitals of silicon : Draw a partial MO diagram between px-orbitals of silicon and the appropriate halide for trimethylfluorosilane and trimethyliodosilane.

Explain how many kilograms of dietary fat are in candy : A specific brand of gourmet chocolate candy contains 7.00 of dietary fat in each 22.7- piece. How many kilograms of dietary fat are in a box containing 4.00 of candy

User Account

All Pages