Chapter 5 Homework - Financial Management
John and Jen will receive $60,000 from their trust fund in 8.75 years. Their discount rate is 4 percent per quarter (note there are 3 months in one quarter). How much would they be willing to sell the trust fund for today? Round your answer to two digits. Note that there are four compounding periods in one year.
$15,204.93
At 6.1 percent interest, how long does it take to double your money? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) At 6.1 percent interest, how long does it take to quadruple it? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
11.71 years 23.41 years
Assume the total cost of a college education will be $345,000 when your child enters college in 18 years. You presently have $73,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
9.01%
Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, Sotheby's sold the Edgar Degas bronze sculpture Petite Danseuse de Quatorze Ans at auction for a price of $10,311,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,377,500. What was his annual rate of return on this sculpture? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Annual rate of return = -4.46%
For each of the following, compute the future value given the annual interest rate (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):
Chegg it.
For each of the following, compute the present value given the annual interest rate (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):
Chegg it.
This table reports investments that your friend Rahel has made in the stock market. The initial investment and their current values are reported, along with the annualized rate of return (interest rate) she has earned on each. Solve for the number of years she has held each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):
Chegg it.
You have just made your first $5,500 contribution to your retirement account. Assume you earn a return of 10 percent per year and make no additional contributions. a.What will your account be worth when you retire in 45 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)b.What if you wait 10 years before contributing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value = $400,897.66 Future value = $154,563.40
Your coin collection contains fifty 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2067, assuming they appreciate at an annual rate of 4.3 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value = $6,333.82
You have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 80 years from now. What is the present value of your windfall if the appropriate discount rate is 8.4 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
I got it wrong brb.
In 1895, the first U.S. Open Golf Championship was held. The winner's prize money was $150. In 2016, the winner's check was $1,800,000. What was the percentage increase per year in the winner's check over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) If the winner's prize increases at the same rate, what will it be in 2040? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Interest rate = 8.07% Future value = $11,597,551.40
Steven recently won $1 in the scratch-n-play lotto. His banker, Marianne, promises to pay him 1% per month if he will invest his money in her bank for 10.5 years. Part A: How much interest will Steven have earned after one year? Note that there are 12 compounding periods in one year. Write your answer as a percent rounded to two decimals, but don't include the percent sign (i.e. 0.1234321 should be written as 12.34). Part B: How much money will Steven have in the bank after 10.5 years? Round your answer to two decimals but don't include the dollar sign. Part C: Given that Steven earns 1% per month, how many years (not months) would Steven have to wait until he had $600 in the bank account? Round your answer to two decimals.
Part A = 12.68% Part B = $3.50 Part C = ?? Years
Imprudential, Inc., has an unfunded pension liability of $415 million that must be paid in 20 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 5.2 percent, what is the present value of this liability? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89)
Present value = $150,568,214.87
