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Posts Tagged ‘Present’

help with net present value / managerial accounting problem (multiple choice)?

01 Jun

Pristine product is considering the purchase of a new machine. The estimated cost of the machine is $25,000. The machine is expected to generate annual cash inflows for the next four years as follows:
Year 1 = $15,000 annual cash flow
Year 2 = $10,000 annual cash flow
Year 3 = $5,000 annual cash flow

The machine is not expected to have a residual value at the end of its useful life. The company uses a discount rate of 10%. Relevant interest factors for 10% single sum and annuity amounts are:

//////// Single Sum //////// Annuity
N=1 __ .9091 ————– .9091
N=2 __ .8264 —————- 1.7355
N=3 __ .7513 ————– 2.4869

What is the expected net present value for the machine?
a.$657
b.$2,273
c.$(4.343)
d.$18,426

 
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Present values of annuities?

21 May

A trust will provide $10,000 to a county library at the beginning of each 3-month period for the next 2 1/2 years. If money is worth 7.4%, compounded quarterly, find the amount in the trust when it begins.

I have no examples like this and it’s an even number so I don’t even know what the answer is supposed to end up being. Trust me, I’ve tried dozens of times. I’m confused!

 
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present value/future value. please help.?

20 May

a student is paid a monthly allowance of $500 for the duration of his studies (1 yr = 12 months). the interest rate is 15% p.a. and the payments are made at the end of each month

a) how much money would need to be deposited on the day of departure to cover the allownce?

b) what is the total value of allowance on the day the final payment is affected?

a) PV of annuity = $22,477.50

b) FV of annuity = $40,834.83

I just don’t see how you can come up with those two values? Could someone please help me with this?

a)
PV = a/r * [1 - 1/(1 + r)^n]
PV = 500/.125 * [1 - 1/(1.0.125)^12]

b)
FV = a/r * [(1 + r)^n - 1]
FV = 500/.0125 * [(1.0125)12 - 1]

what am I doing wrong here?

 
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present value/future value. please help.?

20 May

a student is paid a monthly allowance of $500 for the duration of his studies (1 yr = 12 months). the interest rate is 15% p.a. and the payments are made at the end of each month

a) how much money would need to be deposited on the day of departure to cover the allownce?

b) what is the total value of allowance on the day the final payment is affected?

a) PV of annuity = $22,477.50

b) FV of annuity = $40,834.83

I just don’t see how you can come up with those two values? Could someone please help me with this?

a)
PV = a/r * [1 - 1/(1 + r)^n]
PV = 500/.125 * [1 - 1/(1.0.125)^12]

b)
FV = a/r * [(1 + r)^n - 1]
FV = 500/.0125 * [(1.0125)12 - 1]

what am I doing wrong here?

 
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PRESENT & FUTURE VALUE PROBLEMS?

12 May

I can’t get the right answers to the following problems, please help.
1. mr paul plans to establish an annuity agreement whereby the four children would each receive $3,700 on December 31 of the yrs 2004 to 2018, inclusive. variations in the interest rate during that period are:
12/31/03-12/31/08=12%
12/31/08-12/31/14=11%
12/31/14-12/31/18=9%
COMPUTE the amount mr paul must invest on 12/31/03 to assure the annual payment to his children? THE ANSWER IS $103,425

FUTURE VALUE
Brookes invest $10,00 at the beginning of the next 2 yrs, 10%. how much will brooks have in 2 yrs, if interest is compunded semi annualy? THE ANSWER IS $23,180

 
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present value and interest help?

09 May

Find the present value of an ordinary annuity that has $130 monthly payments for 13 years if the account receives 7.75% interest.

 
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present value of $1000 per year annuity for five years at an interest rate of 12%?

09 May
 
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Present value problem – please help!?

04 May

An investor will receive a five-year annuity of £2,500 per year. She will not receive the first payment until three years from today. If the annual interest rate is 8 per cent, what is the present value of this annuity?

The answer is £8558, but i can’t figure out why?

 
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i need help with my financial class assignment. Is about present and future value?

02 May

problem: you plan to retire in 20 years. your goal is to create a fund that iwll allow you to receive $20,000 at the end of each year for the 30 years between retirement and death. You know you will be able to earn 11% per year during the 30 year retirement period. how large a fund will you need when you retire in 20 yrs to provide the 30 year $20,000 retirement annuity?

 
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What is the present value?

02 May

5-6A. (Present value of an annuity) What is the present value of the following annuities?

a. $2,500 a year for 10 years discounted back to the present at 7 percent
b. $70 a year for 3 years discounted back to the present at 3 percent
c. $280 a year for 7 years discounted back to the present at 6 percent
d. $500 a year for 10 years discounted back to the present at 10 percent

 
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Find the Present Value of an ordinary annuity. Given PMT=$ 150.00, i=0.02, n= 24. Round all final answers to t?

27 Apr
 
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What is the present value of the following annuities?

26 Apr

a. $2,500 a year for 10 years discounted back to the present at 7 percent
b. $70 a year for 3 years discounted back to the present at 3 percent
c. $280 a year for 7 years discounted back to the present at 6 percent
d. $500 a year for 10 years discounted back to the present at 10 percent

 
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Help with present value of an ordinary annuity.?

25 Apr

A lottery to raise funds for a hospital is advertising a $240,000 prize. The winner will receive $1000 each month for 20 years, starting a year from now.
a) If the interest rate is 8.9% per annum, compounded annually, how much must be invested now to have the money to pay this prize?
This question is really bugging me, I can’t seem to get the right answer.
The answer is: $111,943.89. Help please!

 
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Can anyone help? Find the amount and present value of an annuity of $100 payable at the end of each quarter?

23 Apr

for 40 yrs if the interest rate is 6% compounded quarterly?

 
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Calculating Annuity Present Values?

23 Apr

You want to borrow $100,900 from your local bank to buy a new sailboat. You can afford to make monthly payments of $2,000, but no more. Assuming monthly compounding, the highest APR you can afford on a 72-month loan is?

 
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