Question

On Excel ABC Corp. wishes to invest a fixed sum at 4.65% and withdraw $10,000 at...

On Excel

  • ABC Corp. wishes to invest a fixed sum at 4.65% and withdraw $10,000 at the end of each month for the next three years. How much ABC will need to invest? In other words, what is the present value of an ordinary annuity of $10,000 for 36 periods, discounted at a rate of 4.65%/12 per period?
  • Assume that ABC Corp can earn 4.65%, but needs to withdraw $10,000 for 72, not 36 months. How much cash must it now invest to meet its $10,000 / month needs?
  • Assume that ABC Corp. can only earn 3.5% on its investment. What sum does it now need to invest to meet its $10,000 / month cash needs for 72 months?
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When Jim retires at age 67, he wishes to withdraw all his superannuation as a lump...
When Jim retires at age 67, he wishes to withdraw all his superannuation as a lump sum and use that to invest in an annuity that pays him $80,000 each year for 15 years. This $80,000 income comprises of part principal draw down on the lump sum he invested and part interest he earns from the return on his lump sum. Jim can earn a 4% p.a. return on his lump sum investment. By the final year, he will have...
This question about " Engineering Economics ". Question: A growing machine shop wishes to set aside...
This question about " Engineering Economics ". Question: A growing machine shop wishes to set aside money now to invest over the coming years in automating its customer service department. The company can earn 10% on a lump sum amount deposited now, and it wishes to do the following: * Year 1 - no expenses * Year 2 - withdraw $25,000 purchase computers and database software * Year 3 - withdraw $3,000 to purchase additional software * Year 4 -...
Skeeter bought a new bass boat for $22,000. He made a $4,000 down payment and financed...
Skeeter bought a new bass boat for $22,000. He made a $4,000 down payment and financed the remainder at 14.5% for two years with monthly payments. Required: a. Prepare a loan amortization schedule for the first three payment periods. b. How much interest will Skeeter pay, assuming he pays the loan off according to schedule? c. How much will he owe immediately after making the thirteenth (13th) payment Daniel is considering an investment that will pay $25,000 per year for...
Most of these problems will be easier using a spreadsheet. 1. What is the present value...
Most of these problems will be easier using a spreadsheet. 1. What is the present value of a perpetuity with $5000 annual payments? Assume 3% discount rate. 2. How much money do you need to create an annuity of $2000/month for 20 years assuming you can invest the capital in an instrument (say treasuries) with a 3% rate and semi-annual compounding? 3. You wish to purchase a new car which costs $50,000. You have $10,000 for a down payment. The...
1. You need a 20-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage...
1. You need a 20-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 8.1 percent APR for this 240-month loan. However, you can afford monthly payments of only $900, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. Required: How large will this balloon payment have to be for you to keep your monthly...
CORP FIN FINAL PT D 25. You want to have $1 million in your savings account...
CORP FIN FINAL PT D 25. You want to have $1 million in your savings account when you retire. You plan on investing a single lump sum today to fund this goal. You are planning on investing in an account which will pay 7.5% annual interest. Which of the following will reduce the amount that you must deposit today if you are to have your desired $1 million on the day you retire (there could be more than one answer)?...
*Round all values to 4 decimal places. 1. What is the present value of $10,000 paid...
*Round all values to 4 decimal places. 1. What is the present value of $10,000 paid at the end of each of the next 71 years if the interest rate is 8% per​ year? The present value is $______. ​(Round to the nearest​ cent.) 2. Assume that your parents wanted to have $110,000 saved for college by your 18th birthday and they started saving on your first birthday. They saved the same amount each year on your birthday and earned...
1. For the next 6 years, you pan to make equal quarterly deposits of $600.00 into...
1. For the next 6 years, you pan to make equal quarterly deposits of $600.00 into an account paying 8% compounded quarterly. How much will be the total you have at the end of the time? 2. How much money will you have to deposit now if you wish to have $5,000 at the end of 8 years. Interest is to be at the rate of 6% compounded semiannually? 3. In the California “Million Dollar Lottery” a winner is paid...
Funding Retirement The long-run goal of many is enjoying a long, gratifying retirement without financial worries....
Funding Retirement The long-run goal of many is enjoying a long, gratifying retirement without financial worries. This is the case for Andrew Potts. He is attempting to manage Garcia Energy in such a way that it provides for his retirement through the accumulation of funds during his working years. Mr. Potts is expecting to retire in 20 years, at the age of 70. Upon retirement, he is seeking an annual beginning-of-the year payment of $60,000 ($5,000/month) for 16 years. For...
Intermediate 1. Multiple compounding periods: Find the future value of an investment of $2,500 made today...
Intermediate 1. Multiple compounding periods: Find the future value of an investment of $2,500 made today for the following rates and periods: a.            6.25 percent compounded semiannually for 12 years b.            7.63 percent compounded quarterly for 6 years c.            8.9 percent compounded monthly for 10 years d.            10 percent compounded daily for 3 years 2. Multiple compounding periods: Find the present value of $3,500 under each of the following rates and periods. a.            8.9% compounded monthly for five years. b.          ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT