What will be the loan effective annual interest rate

Assignment Help Corporate Finance
Reference no: EM13318547

1. Marcus has won the grand prize in a lottery and must choose between the following three options:
a. Receive a lump sum payment of $9,000,000
b. Receive annual end of the year payments of $1,000,000 for the next 12 years
c. Receive annual end of the year payments of $ 1,500,000 for the next 8 years
Which option should Marcus choose based on an annual investment rate of 8%?

2. How much money does Kristi need to have in her retirement saving account today if she wishes to withdraw $25,000 per year for 30 years? She expects to earn an average rate of 8%.

3. What is the future value of 4,900 invested for 8 yrs at 7 percent compounded?

4. In 2005, soccer player David Beckham signed a contract reported to be worth $51 million. the contract called for $2 million immediately and $10 million in 2006. The remaining $39 million was to be paid as $9 million in 2007, $7 million in 2008, $6 milion in 2009, $ 5 million in 2010, $4 million in 2011 and in 2012, $2 million in 2013, and $1 million in 2014 and 2015. Assuming all the payments, except the first $2 million are paid at the end of each year and the discount rate is 9%, what kind of deal did the soccer player snag?

5. What is the present value of the following set of cash flows at a 10% discount rate:
Year 1 2 3 4
Cash flow $600 -$600 $600 -$600

6. What is the future value of the set of cash flows (from the previous problem) 4 years from now? Assume an interest rate of 10%.

7. Starting today, George is going to contribute $300 on the first of each month to his retirement account. his employer will contribute an additional 50% of the amount George contributes. If both George and his employer continue to do this and he can earn a monthly rate of .68%, how much will George have in his retirement account 35 years from now?

8. James Smith has a 10 year ordinary annuity that pays $1500 every 6 months and has an annual percentage rate (APR) of 7.5%.
a. Calculate the future value of this ordinary annuity.
b. Assuming this was an annuity due, calculate the future value of this annuity.

9. You have contacted a number of car dealerships to determine the best interest rate on a new automobile loan. a Ford dealership has quouted you a 5 year, 10% loan in the amount of $35,000 that will require monthly payments.
a. What is the monthly loan payment?
b. What will be the loan's effective annual interest rate (EAR)?

Reference no: EM13318547

Questions Cloud

How much time does it take her to close the door : While exploring a castle, Exena the Exterminator is spotted by a dragon who chases her down a hallway. how much time does it take her to close the door
Estimated inflation will average per year for an annuity : You may pay $15,000 for an annuity that pays $2500 per year for the next 10 years . You want a real rate of return of 5% , and you estimated inflation will average 6% per year.
Calculate the profit or loss for the investment banker : How many shares of stock must be sold for the company to net $40 million after costs and expenses?
Find the force the man is pushing on the box : A large box with mass 45 kg is being pushed up a ramp at a 32o incline at a constant velocity by a man pushing parallel to the incline for 7.80 m, determine The force the man is pushing on the box
What will be the loan effective annual interest rate : How much money does Kristi need to have in her retirement saving account today if she wishes to withdraw $25,000 per year for 30 years? She expects to earn an average rate of 8%.
How fast is it going around : If a person on a 35.0 m diameter Ferris wheel feels 30% heavier at the bottom of the wheel, how fast is it going around
What is its self-supporting growth rate : What is its self-supporting growth rate? Do not round intermediate steps. Round your answers to the nearest whole.
Calculate income under absorption costing assuming : Tennessee Tack manufactures horse blankets. In 2010, fixed overhead was applied to products at the rate of $8 per unit. Variable cost per unit remained constant throughout the year. In July 2010, income under variable costing was $188,000. July's beg..
What sort of relationship is portrayed by asset pricing mode : What sort of relationship is portrayed by asset pricing models

Reviews

Write a Review

Corporate Finance Questions & Answers

  Increasing foreign competition

Assume that oil rates hit an all time high of $100 a barrel, driving United State inflation up to 7 percent per year. At the same time, rising foreign competition has generated unacceptably high levels of unemployment in the United State

  How would you restructure the firms debt

Calculate the cost of debt. Explain your answer. How would you restructure the firm's debt? Explain your answer and calculate the weighted average cost of capital.

  What is the internal rate of return for project

What is the Internal Rate of Return for Project A, what is the Profitability Index for Project B and what is the Discounted Profitability Index for Project A

  What is the value of midwest pine to kc deck

From a financial manager's perspective, WHY would this merger have been a value creating proposition? In other words, why are the two firms worth more together than apart?

  What is the importance of the acid-test ratio

Why is shareholders wealth maximization a better objective than maximizing earnings of earnings per share and what is the importance of the acid-test ratio

  Comparing organizations performance

What conclusions would one come to related to company's performance over the last 5-years in terms of liquidity, activity, leverage, profitability and market value ratios?

  What is dybvig''s cost of equity capital

The Dybvig Corporation's common stock has a beta of 1.21. If the risk-free rate is 3.5 percent and the expected return on the market is 11 percent, what is Dybvig's cost of equity capital?

  Compute the expected value

You have decided to invest a graduation gift of $1000. The yearly rate of return is given in the following table for each of three different types of investments & three (3) different states of economy.

  How would the accounts change

If Trans World stock currently sells for $42 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.

  Find all operating expenses

The current grill is being depreciated straight line over its useful life of 10 years after which it will have no salvage value.

  Describes the impact on the financial statements

Which of the following properly describes the impact on the financial statements when a company reports wage expense of $7,500, of which $2,500 remains unpaid?

  What yearly payment would make the two offers identical

Which payment option should the company choose and what yearly payment would make the two offers identical

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