What is the present value of this liability

Assignment Help Financial Management
Reference no: EM131999994

1. Suppose you win the Publishers Clearinghouse $10 million sweepstakes. You can either receive $8 million immediately or receive equal annual installments of $333,333.33 over 30 years. Which of the following is correct? (Ignore taxes)

*You cannot choose between the two without first calculating future values.

*You will always choose the lump regardless of interest rates.

*You will choose the annuity payment if the interest rate is 1%.

*You will always choose the annuity

2. Imprudential inc has an unfunded pension liability of $753 million that must be paid in 15 years. to assess the value of the firms stock, financial analysts want to discount this liability back to the present. if the relevant discount rate is 7 % what is the present value of this liability? round to nearest 2 decimal places

present value: $ _________

Reference no: EM131999994

Questions Cloud

So factor demand is a derived demand : So Factor demand is a derived demand. Can some one explain this? Also, where is this demand derived from? Can someone Illustrate an example for me?
What is the impact that technology has had on our society : What is the impact that technology has had on our society? What would our world be like without it?
About the odd dividend policy : Maloney, Inc., has an odd dividend policy. If you require an annual return of 10 percent on the company’s stock, how much will you pay for a share today?
Determine materiality level for preliminary audit planning : Determine an appropriate materiality level for preliminary audit planning purposes. Explain your reasons for selecting this materiality level
What is the present value of this liability : Financial analysts want to discount this liability back to the present. if the relevant discount rate is 7 % what is the present value of this liability?
Compute the balance in land account : The $601,200 was a 10-year loan bearing interest at 10%. Compute the balance in Land and Building accounts at December 31, 2017, and December 31, 2018
What price would an investor be expected to pay per share : What price would an investor be expected to pay per share next? year?
Price elasticity of demand for cds : Using the averages of the two prices and? quantities, the price elasticity of demand for CDs is?
Restrict the number of visitors to yellowstone : Assume that the National Park Services want to restrict the number of visitors to Yellowstone to 3m visitors a year, which is smaller than the current record

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firms sustainable growth rate

Plank's plants had net income of $10,000 on sales of $40,000 last year. the firm paid a dividend of $2,300. total assets were $ 700,000 of which $350,000 was financed by debt. what is the firm's sustainable growth rate? what would be the maximum poss..

  Calculate standard deviation of expected returns for stock

Stocks X and Y have the following probability distributions of expected future returns.. Calculate the expected rate of return. Calculate the standard deviation of expected returns for stock X (y=20.35%) and the coefficient variation for stock Y. Is ..

  Bonds outstanding with coupon rate

Union Local School District has bonds outstanding with a coupon rate of 3.7 percent paid semiannually and 26 years to maturity. The yield to maturity on these bonds is 4.3 percent and the bonds have a par value of $10,000. What is the price of the bo..

  Standard deviation of return on minimum variance portfolio

An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on the minimum variance portfolio is _________.

  Compute the net present value of this project

Northwest Industries is considering a project with the following cash flows: Initial Outlay=$2,800,000 After-tax operating cash flows for years 1-4=$850,000 per year, Additional after-tax terminal cash flow at end of Year 4=$125,000 Compute the net p..

  New machine that is more productive and energy efficient

XYZ Inc. presently is operating a machine that costs $50,000 to run annually. A sales rep has provide some information on a new machine that is more productive and energy efficient. This machine will have a useful life of 7 years, cost $38,000 to pur..

  Stockouts for particular item-calculate safety stock

Management has not been pleased with the number of stockouts for a particular item. This item has 550 pounds of demand during the lead time and a standard deviation during the lead time of 55 pounds. Calculate the Safety Stock assuming a 4% risk leve..

  What is the after tax cost of the firm debt

Suppose your firm wishes to finance a project with debt. The current price of the firm's debt is $1,100. These bonds pay an annual coupon rate of 9.5%, have a par value of the standard $1,000, and a maturity at the time of issuance of 30 years. Your ..

  Investor want to be higher going-in or going-out cap rate

Which one does an investor want to be higher, the “going-in” or the “going-out” cap rate? Why?

  What is the equivalent annual cost of the cadillac cleaner

Assuming a 10% discount rate, what is the equivalent annual cost (EAC) of the Cadillac cleaner?

  Value bonds outstanding-what is current price of the bond

The Nick Company has a series of $1,000 par value bonds outstanding. what is the current price of the bond?

  Marginal tax rate for the levels of corporate earnings

Find the marginal tax rate for the following levels of corporate earnings before? taxes $14,900?; $61,000?; $89,100?; $196,000?; $404,000; $1.6 ?million;

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