The present worth of $5,000 in year 3, $10,000 in year 5, and $10,000 in year 8 at an interest rate of 12% per year is closest to?
a. 12,100
b. 13,300
c. 14,900
d. 16,200
1. A firm is expected to earn $10,000, $25,000, $48,000, and $75,000 during the next four years, after which it will be dissolved. What is the present value of the firm if the discount rate is 8%?
Please show work and explain rationale.
Compute the present value of a $100 cash flow for the following combinations of discount rates and times:
a. r = 8 percent. t = 10 years.
b. r = 8 percent. t = 20 years.
c. r = 4 percent. t = 10 years.
d. r = 4 percent. t = 20 years.
Determine the present value P you must invest to have the future value A at simple interest rate r after time t.
A=$8000.00 r=11.5% t=6months.
Round this to the nearest cent
A. What single investment made today, earning 12% annual interest, will be worth $6,000 at the end of 6 years?
B. What is the present value of $6,000 to be received at the end of 6 years if the discount rate is 12%
C. What is the most you could pay today for a promise to repay you $6,000 at the end of 6 years if your opportunity cost is 12%?
D. Compare, contrast, and discuss your findings in parts a through c.
Joe planned to put his son, John, to a prestigious university called Brain Trust University (BTU) 10 years from now. Currently, total estimated cost (tuition, room and board, books, and other expenses) is about $60,000 per year. This cost is expected to increase at the average rate of 8% per year for the foreseeable future. It is assumed that, ten years from now, John will be attending BTU for 4 years and that Joe can invest in a 529 plan, which is tax-free upon withdrawal, at an average rate of 10%.
Furthermore, John is expected to receive $100,000 trust fund from his favorite aunt, Susan, when he enter a college ten years from now. How much must Joe has to contribute to the 529 plan EACH YEAR, starting one year from now, for the next ten years to cover John’s college cost for four years?
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