What is the present value of the savings if the interest

Assignment Help Finance Basics
Reference no: EM13488857

1.You are thinking of building a new machine that will save you $1000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 2% per year forever.What is the present value of the savings if the interest rate is 5% per year?

2.You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug’s profits will be $2 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires,other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10% per year?

3.Your oldest daughter is about to start kindergarten at a private school. Tuition is $10,000 per year, payable at the beginning of the school year. You expect to keep your daughter in private school through high school. You expect tuition to increase at a rate of 5% per year over the 13 years of her schooling. What is the present value of the tuition payments if the interest rate is 5% per year? How much would you need to have in the bank now to fund all 13 years of tuition?

Reference no: EM13488857

Questions Cloud

Analyse the physical internal control weaknesses in system : HI5019 Strategic Information Systems for Business and Enterprise (T1, 2013). Analyse the physical internal control weaknesses in the system. Model your response according to the six categories of physical control activities specified in the COSO in..
Find with what speed does water spray from the hose : To water the yard, you use a hose with a diameter of 3.5cm . Water flows from the hose with a speed of 1.5m/s. with what speed does water spray from the hose
Evaluate the conductivity of silicon : Silicon has been doped with 5 x 10^22 m^-3 of boron atoms. Calculate the conductivity of silicon at (a) room temperature (32 C) (b) at (125 C)
Impact to the organization related to ethical breach : Corporate ethical breaches in recent times, assess whether or not you believe that the current business and regulatory environment is more conducive to ethical behavior and determine how the organizational ethical issue was detected and how managem..
What is the present value of the savings if the interest : You are thinking of building a new machine that will save you $1000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 2% per year forever.What is the present value of the savings if the interest rate ..
Using variable specific heat method : 1. A Brayton cycle uses air and produces a net work of 14000 Btu/s with an inlet state of 60°F, 14.7 psi and a compression ratio of 16. The heat added in the combustion process is 400 Btu/lbm. If the thermal efficiency is 0.547 Determine: Using va..
What is the speed of the blood in an arteriole : A typical arteriole has a diameter of 0.030 mm and carries blood at the rate of 5.5×10?6cm3/s. What is the speed of the blood in an arteriole
Explain how to prepare 2-bromo-2-phenylpropane from benzene : How do you prepare 2-Bromo-2-phenylpropane from benzene. Using Alcl3 as one of the reagents and going through an intermediate.
Estimate the speed of the water : A horizontal pipe contains water at a pressure of 100kPa flowing with a speed of 2.0m/s . The pipe narrows to one-half its original diameter. What is the speed of the water

Reviews

Write a Review

Finance Basics Questions & Answers

  Certain industries are subject to peculiar financing and

certain industries are subject to peculiar financing and operating conditions calling for special consideration in

  What role does the central banking system play within the

1. what role do financial institutions play within the global marketplace? 2. how can policies and regulations impact

  Returns and the bell curve

An investment has an expected return of 8% per year with a standard deviation of 4%. Assuming that the returns on this investment are at least roughly normally distributed, how frequently do you expect to lose money?

  What is the portfolio weight of stock d

You own a portfolio that consists of $18,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock D?

  Davidson company is a limited liability company it earned

davidson company is a limited liability company. it earned 100000 in its first year of operation. it may elect to be

  What will be the new prices of the two bonds

Suppose the maturities of the two bonds are extended to 10 years. What will be the prices of the two bonds given a required yield of 8 percent?

  Selecting appropriate financial institution

Choose the most appropriate financial institution type for each of the following scenarios. Describe your selection and describe at least the several features of each of your selections.

  What is the average annual percentage increase

A home purchased for 122 thousand dollars in 2002 is sold for 220 thousand dollars in 2006. What is the average annual percentage increase?

  Comparison of private and public debt offering

The Landers Corporation needs to raise $1 million of debt on a 25-year issue. If it places the bonds privately, the interest rate will be 11 percent. Which plan offers the higher net present value? For each plan, compare the net amount of funds ini..

  Discuss how this might affect the apportionment

Discuss how this might affect the apportionment of the representation in House of Representative.

  Which is most likely to raise the unemployment rate

According to Keynesian economics, which of the following is most likely to raise the unemployment rate?

  Determination of weighted average cost of capital

If your company aftertax cost of debt is 6 percent, the cost of preferred stock is 10%, and the cost of common stock is 11 percent, determine the Weighted Average Cost of Capital?

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