(Lexi) $5‚000 a year indefinitely. How much should Dottie deposit in an account paying 8 percent annual interest? PV = 5000 / 0.08 = 62500 7) Calculate the present value of an annuity of $3‚900 each year for four years‚ assuming an opportunity cost of 10 percent. 8) Calculate the future value of an annuity of $5‚000 each year for eight years‚ deposited at 6 percent. Rate | 6% | Nper | 8 | Pmt | 5000 | Pv | $0.00 | Fv | ($49‚487.34) | 9) Calculate the present value
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Submitted by: Weslie L. Villejo‚ TCDP1 Submitted to: Mr. Baylon 5-29. 10.30% firm 12.75% bank 2.45% increase 5-30. a. 25 60.18 Erika 85.18 25 19.23 Kitty 44.23 b. ($2‚985.06) c. I think its rational because the mutual funds are invested in high quality bonds which reaps a sure 6% per year interest. On the other hand‚ the 20% average per year interest on the newly issued bio-tech stocks are somehow a bit
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Exam 2 Finance 470 1. When is EAC analysis appropriate for comparing two or more projects? Why is this method used? Are there any implicit assumptions required by this method that you find troubling? Explain. The EAC approach is appropriate when comparing mutually exclusive projects with different lives that will be replaced when they wear out. This type of analysis is necessary so that the projects have a common life span over which they can be compared; in effect‚ each project is assumed
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Financial Management MM.100 Subject Code: B-103 Part One: 1. Question :The approach focused mainly on the financial problem of corporate enterprises Ans: (a)Ignored non-corporate enterprise. 2. Question :These are those shares‚ which can be redeemed or repaid to the holders after a lapse of the stipulated period Ans: (c) Redeemable preference shares 3. Question: This type of risk arises from changes in environment regulations‚ zoning requirements‚ fees‚ licenses and most frequently taxes
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equipment is likely to generate a return greater than Culley’s cost of capital d. The Culley Company should recover the cost of the new equipment e. All of the statements are true. 4. A problem involving periodic payments cannot be solved using annuity tables if: a. You don’t know the amount of the payment. b. The payments occur after the lump sum. c. The interest rate is compounded quarterly. d. The payments occur before the lump sum. e. The payment amounts are unequal 5. Bill Dunn made an investment
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Finance Final Study Guide FIN 331 – Moser – Study Guide for Exam 1 – Spring 2011 Important Concepts * Forms of Business Organization * Proprietorship- an unincorporated business owned by one individual * Partnership- legal arrangement between two or more people who decide to do business together * Advantages * Ease of formation * Subject to few regulations * No corporate income taxes * Disadvantages * Limited life
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LITERATURE REVIEW OF INVESTMENT APPRAISAL METHODS What is meant by investment appraisal practices? The investment appraisal process includes the generation of ideas‚ assessment and authorization‚ implementation and control of the project (Dennis R. Young‚ 2007). Decision-making is increasingly more complex today because of uncertainty. Additionally‚ most capital projects involve numerous variables and possible outcomes. For instance‚ estimating cash flows associated with a project involves working
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expenses of $160‚000 give us a yearly net income of $500‚000. The new lift has an economic life of 20 years and we would like to make 14% on our investment. The NPV factor of 14% at 20 years is 6.6231. By multiplying our net yearly income or our annuity of $500‚000 times the NPV factor of 6.6231 we will have a NPV of $3‚311‚550. When comparing the NPV to the amount of the investment I find that there will be a before tax profit of $11‚550‚
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retirement age; • net earnings from self-employment‚ such as own or operate a business; and • gross income received as statutory employee. John Smith will be taxed on his income of $300‚000 regardless if he received the amount as a lump sum or in annuity. The constructive receipt doctrine states that “… taxpayer is liable for income‚ which has not been physically received‚ but has been credited to the taxpayer’s account or otherwise becomes available for him or her to draw upon in the future.”
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following equation: [pic] 1‚276.76 = [pic] $40 + $1000 (1+ r)t (1+ r)60 Or equivalently‚ 1‚276.76 = 40 × Annuity factor (r ‚ 60) + 1‚000 × PV factor (r ‚ 60) These equations have only one unknown variable‚ the interest rate‚ r . you can use a financial calculator or spreadsheet to confirm that the solution is r = .03‚ or 3% per half year. This is considered
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