What is the value of option one

Assignment Help Financial Management
Reference no: EM132070144

1. You're trying to save to buy a new $220,000 Ferrari. You have $39,000 today that can be invested at your bank. The bank pays 6.0 percent annual interest on its accounts. How long will it be before you have enough to buy the car?

2. You have won the lottery and you have the choice of taking your prize in one of three ways. First, you can choose to receive a single payment of $1,500,000 immediately. Second, you can choose to be paid $225,000 a year for 20 years. If select the third alternative, you will be entitled to the amount of $2,500,000 after 10 years. If your discount rate is 12%,

What is the value of Option 1?

Reference no: EM132070144

Questions Cloud

Requires consideration of the funded delivery period : The budgeting policy that requires consideration of the funded delivery period and the production of complete, usable end items is known as:
Two major theories used to detect out of control costs : What are the two major theories used to detect out of control costs?
What is the constant growth rate : What is the constant growth rate, g?
What will be the market price at the end of six years : Allergan Industries' stock is currently selling for $160, What will be the market price at the end of 6 years?
What is the value of option one : You have won the lottery and you have the choice of taking your prize in one of three ways. What is the value of Option 1?
What are your annual payments : Suppose you borrowed $35,000 at a rate of 4.25% and must repay it in 6 equal installments. What are your annual payments?
What is the present value of this liability : If the relevant discount rate is 6.0 percent, what is the present value of this liability?
Firm selling shares to general investing public : Initial public offerings usually involve the firm selling shares to the general investing public.
How the value of shares is related to the cost of capital : How the value of shares is related to the cost of capital. How to make a successful long-term investment decision.

Reviews

Write a Review

Financial Management Questions & Answers

  Paying an effective annual rate

You are paying an effective annual rate of 15.80 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on your account? How would you set this up and figure it out?

  Market for foreign exchange–currency futures

hat could you do in order to make some profit and how much is the profit?

  How much will you pay in interest

How much will you pay in interest, and how much will you pay in principal, during the first month, second month, and first year?

  Some of the implications of overpaying for acquired compay

Some of the implications of overpaying for an acquired company are when stock prices are affected. If a company chooses to make a deal and stock prices are declined, that usually is a hint that a company overpaid to close a deal. If a company finds t..

  Take tuition stabilization plan-taking cheaper alternative

Your sending your daughter to a prestigious private college starting next year. She will attend for four years. The current cost for one year is $60,000, but is expected to rise 2% per year over the next 10 years. If your investments earn 6% per year..

  What is the net present value of this investment

An orcharder spends $100,000 to planet pomegranate bushes. It will take four years for the bushes to provide a usable crop. He estimates that every year for 20 years after that he will receive a crop worth $9,500 per year. If the discount rate is 9%,..

  About the retirement goal

Your retirement goal is to save $400,000 by the time you are 65 years old. You have been saving $926.65 per year for the last 30 years, and you will retire in 5 years (at age 65). The interest rate has just changed from 12% (which has been the level ..

  With interest credited to the account at end of each year

Suppose you deposit $5340 in a savings account that pays 4% annual interest, with interest credited to the account at the end of each year. How much money will be in the account after five years?

  What is the portfolios expected returns

A portfolio is invested 47.7% in Stock A, 23.1% in Stock B, and the remainder in Stock C. The expected returns are 13.2%, 32.9%, and 19.9% respectively. What is the portfolio's expected returns?

  What is equivalent annual worth of the savings

what is the equivalent annual worth of the savings?

  Capital structure is limited to common equity and bonds

ABC's capital structure is limited to common equity and bonds.

  Products-services from both consumer and business markets

You may use products/services from both the consumer and business markets.

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