What will be the yearly withdrawal for the son from trust

Assignment Help Financial Management

Reference no: EM131821455

a) A wealthy parent is trying to fund a trust fund for his oldest son. The parent has set aside $293,200.00 today in an account that pays 8.00% annual interest. His oldest son will begin receiving the trust in 10.00 years, and the trust is set up to pay 15.00 identical annual payments. What will be the yearly withdrawal for the son from the trust?

b) A successful businessman is selling one of his fast food franchises to a close friend. He is selling the business today for $2,959,800.00. However, his friend is short on capital and would like to delay payment on the business. After negotiation, they agree to delay 3.00 years before the first payment. At that point, the friend will make quarterly payments for 12.00 years. The deal calls for a 8.68% APR “loan” rate with quarterly compounding. What quarterly payment will the friend make on the loan?

c) A loan shark offers $9,525.00 today in exchange for paying him $1,877.00 per year forever. What is the annual rate of interest on this “loan”?

d) A company generates $97,208.00 in cash flow per year. If investors want a 9.00% annual return to buy the company, how much are they willing to pay? Let’s assume the company will last forever for valuing the opportunity.

Reference no: EM131821455

Questions Cloud

All assets are depreciated using straight line method : All assets are depreciated using straight line method. Determine which setup should be chosen if the MARR for the firm is 10% and the marginal tax rate is 34%.

What is yearly cash flow from deal for venture capitalist : you approach a venture capitalist seeking cash for funding your business. What is the yearly cash flow from this deal for the venture capitalist?

Calculate HCBs intrinsic value per share : HCB, Inc. just had free cash flows of $4.00 million (FCF0). Calculate HCB's intrinsic value per share.

Calculate the total amount in two funds at end of one year : Fund A accumulates at an interest rate of 6% compounded monthly. Calculate the total amount in the two funds at the end of 1 year.

What will be the yearly withdrawal for the son from trust : A wealthy parent is trying to fund a trust fund for his oldest son. What will be the yearly withdrawal for the son from the trust?

What is the value of this opportunity today : He will not receive any cash flows from the investment until end of the 5th year. what is the value of this opportunity today?

What do you expect change in real interest rates : If inflation is up by 5% and nominal rates go from 5 to 6% and real interest increases from 4% to new real rate,what do you expect change in real interest rates

High can discount rate be before you would reject project : A project that costs $3100 to install will provide annual cash flows of$7 for each of next 7 year. How high can discount rate be before you would reject project

How much would they need to raise : If ABC decided to raise enough capital to pay down accounts payable enough to take the discount, how much would they need to raise?

User Account

All Pages