What will the monthly payments have to be

Assignment Help Financial Management
Reference no: EM13881962

You need to save $50,000 in 10 years from today. You want to make annual payments at the end of each year into a sinking fund that will earn interest at an annual rate of 10 percent.

a) What will the annual payments have to be?

Suppose that the borrower will make monthly payments that earn 10 percent interest, compounded monthly.

b) What will the monthly payments have to be?

Reference no: EM13881962

Questions Cloud

What is the dollar spread for this bill : A Treasury bill has a bid yield of 3.58% and an ask yield of 3.52%. The bill matures in 100 days. Assume a face value of $1,000. What is the dollar spread for this bill?
Mutual fund-concerned about inflation and taxes : What mutual fund would you recommend for a 65 year old retired school teacher who is extremely conservative in her investing? She doesn’t want to lose one dollar. She has retirement money to live on but she is concerned about inflation and taxes. Wha..
What is known about the rate of return on the increment : What is known about the rate of return on the increment of investment between the two alternatives? If the MARR is 12%, which alternative should be selected and why?
Determine which manufacturer offers the best economic choice : Annual cost estimates are expected to be high to ensure readiness at any time. Use a spreadsheet and incremental ROR analysis to determine which manufacturer offers the best economic choice.
What will the monthly payments have to be : You need to save $50,000 in 10 years from today. You want to make annual payments at the end of each year into a sinking fund that will earn interest at an annual rate of 10 percent. What will the annual payments have to be? What will the monthly pay..
Life insurance policy-no mortgage is assumed : Theo is a consultant who earns 72,000$ annually. His wife, Julia is a homemaker and theey have one child, Ben. Theo is covered by 200,000$ life insurance policy. The couple assumes an annual inflation rate of 3%. How would you design a finance plan f..
Estimates for four alternative building locations : Caterpillar Corporation wants to build a spare parts storage facility in the Phoenix, Arizona, vicinity. Estimates for Four Alternative Building Locations
Fixed asset will be depreciated straight-line to zero : Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w..
Callable bond outstanding on the market : Fooling Company has a 10.8 percent callable bond outstanding on the market with 25 years to maturity, call protection for the next 10 years, and a call premium of $100. What is the yield to call (YTC) for this bond if the current price is 105 percent..

Reviews

Write a Review

Financial Management Questions & Answers

  Natural gas futures to hedge its costs of power production

Chevron is considering the use of natural gas futures to hedge its costs of power production. Which of the following methods is Chevron most likely to use to deem this hedge highly effective?

  Average consistently positive abnormal returns

Suppose you find that prices of stocks before large dividend increases show on average consistently positive abnormal returns. Is this a violation of the EMH?

  State what effect would rising rates on corporate earnings

Given this economic background...Compose a 2-4 page report, single-spaced, on the following topic: If the Fed decides to raise interest rates next year, what effect would rising rates have upon the following:

  Retirement fund consists-calculate your portfolios new beta

Suppose your retirement fund consists of a $7,500 investment in each of 20 (twenty) different common stocks. The portfolio's beta is 1.35. Now, suppose you sell 1 (one) of the stocks with a beta of 1.0 for $7,500 and use the proceeds to buy another s..

  Stock repurchases

Beta Industries has net income of $3,400,000, and it has 1,085,000 shares of common stock outstanding. The company's stock currently trades at $65 a share. Beta is considering a plan in which it will use available cash to repurchase 30% of its shares..

  Determine the firms current earnings per share

Security Data Company has outstanding 50,000 shares of common stock currently selling at $40 per share. The firm most recently had earnings available for common stockholders of $120,000, but it has decided to retain these funds and is considering eit..

  The binominal model-what is the options value

A current price of a stock is $22 and the end of one year its price will be either $27 or $17. The annual risk free rate is 6.0% based on daily compounding. A 1-year call option on the stock with an exercise price of $22 is available. Based on the bi..

  Reinvest in its faster-growing snack business

Speculate as to why Kraft chose not to divest its grocery business and use the proceeds either to reinvest in its faster-growing snack business, to buy back its stock, or a combination of the two.

  What is the amount of the operating cash flow

United Enterprises paid $12,000 in dividends and $21,300 in interest over the past year. Sales totalled $139,700 with costs of $101,400. The depreciation expense was $10,500. The applicable tax rate is 34 percent. What is the amount of the operating ..

  Calculate a value in response

Calculate a value in response to the following: Believing that an estimated increase in sales is overly optimistic, a company director is requesting data predicting annual profit if the selling price calculated above is adopted but the change in s..

  Assume face value and semiannual coupon payments

You buy a 20-year bond with a coupon rate of 8% that has a yield to maturity of 9%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 10%. What is your return over the 6 months?

  Evaluate the performance of a company

Evaluate the performance of a company using various financial analytical tools and analyse different patterns of cost behaviour and apply cost-volume-profit analysis to business decisions.

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