User Account

All Pages

What is the value of the agreement

Assignment Help Finance Basics
Reference no: EM133116751

A person runs up to you, short $1500. He offers to pay you $400 a year for the next 15 years if you spot him now. You try to do a rough calculation to determine if its worth it assuming you trust his credit worthiness as much as you trust the U.S. dollar.

1) With the prevailing 1 year treasury rate at 3.20%, what is the value of the agreement (NPV) and should you take it?

2) Changing the story, the person is not broke and a gambling addict. Instead, being very superstitious, he asks you to stand near him during a game as good luck. As a reward, he decides to offer you $50 a year in perpetuity. You decide to sell this agreement to another student. What would be the fair value of the sale assuming the same 1 year treasury rate at 3.20%?

Reference no: EM133116751

Questions Cloud

Operating return on assets and return on equity : The Malia Corporation had sales in 2019 of $70 million, total assets of $50 million, and total liabilities of $21 million.
What is the standard deviation of portfolio : Q) Refer to the table above, What is the standard deviation of this portfolio if the expected return E(Ri), standard deviation (si), covariance (COVi,j), and as
Compare the two ratios computed in requirement : Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk
What is the total payout to investors : Corporate Debt. Haricot Corp. and Pinto Corp. both have profits of $100 million. Haricot is financed solely by equity, while Pinto has issued $150 million of 8%
What is the value of the agreement : A person runs up to you, short $1500. He offers to pay you $400 a year for the next 15 years if you spot him now. You try to do a rough calculation to determine
7BUIS010W Data Warehousing and Business Intelligence : 7BUIS010W Data Warehousing and Business Intelligence Assignment Help and Solution, University of Westminster - Assessment Writing Service
What is yield to? maturity : Abner? Corporation's bonds mature in 22 years and pay 11 percent interest annually. If you purchase the bonds for ?$1,125?, what is your yield to? maturity?
Covid19 environment of higher interest rates : Considering the U.S. economy is moving towards the post-COVID19 environment of higher interest rates (higher cost of debt), what effects of such a move would yo
Explain forthcoming business venture : To create a fund for his forthcoming business venture. Matthew decides to deposit P5.000 at the end of each month to his bank account. If the bank pays 2% compo

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd