What is the present value of an annuity

Assignment Help Financial Management

Reference no: EM132071917

1. You can buy a car for $40,000 cash and receive $2,500 cash-back or pay the total in 48 monthly instalments with 0% financing. Which option would you prefer if the market rate of interest 4% APR, compounded quarterly.

2. Stark Corporation have just paid a $20 dividend. The dividend will grow at an annual rate of 6% and 7% alternatively forever. That is, the growth rate of the dividend will be 6% next year (end of year 1), 7% the year after, followed by 6%, and so on. What is the current share price if the required return is 10%?

3. What is the present value of an annuity that pays $1000 at the end of each year for 10 years starting from the end of year 1, with a discount rate equal to the growth rate of 10%?

Reference no: EM132071917

Questions Cloud

Formulate market segmentation variables : Using your Chapter 1 output, describe your coffee or tea consumers using the respondentâ€TMs profile as variables.

Calculate profit - loss and balance sheet : The following is the summary of the cash box of sesay for the year ended 31/12/15 - Providing profit/loss and Balance sheet for the year ended 31/12/15

Differences between parametric and nonparametric tests : Discuss the differences between parametric and nonparametric tests. The response must be typed, single spaced.

Calculate vintage return on equity : The total assets to equity ratio for the firm is 2.1. Calculate Vintage’s return on equity.

What is the present value of an annuity : What is the present value of an annuity that pays $1000 at the end of each year for 10 years starting from the end of year 1,

Examine the influences of sustainability : Explore the ways knowledge and decision-making of groups and society can be used to increase customers, customer retention.

Strategic planning process : Yes, I do believe that quality of care initiatives can be linked to the strategic planning process because they go hand and hand with each other.

Where do you fall on the organizational chart : Write a 700- to 1,050-word paper that evaluates your relationships with connections on the organizational chart. Consider the following.

Determine the direct labor cost for the toy truck : How do you determine the direct labor cost for the toy truck with the current process if each worker recieves $15/hour, expressed in dollars per toy truck?

User Account

All Pages