Question

- What is the size of the scholarship that can be paid in perpetuity at the end of every three months from a fund $15,200. Interest is interest is 6.72% compounded annually.

***Please use financial calculator method and show the
values being entered for PY, CY, I, N, PMT, FV, PV along with your
final answer***

Answer #1

The problem can be solved using perpetuity.

Fund Value = Cash Flow / Interest Rate {We are not considering growth as there is none}

15,200 = Cash Flow / 6.72%

Cash Flow = 1,021.44

So we need a fund od $15,200 to receive cashflow of $1,021.44 each year at 6.72% yearly for perpetuity.

Here the payment will be made quarterly. So,

Quarterly Payment = Annual Payment / 4

= 1,021.44 / 4

= $255.36

So a scholarship of $255.36 can be received quarterly with a fund size of $15,200

2) Gertrude has borrowed $6000 from
her bank to buy a new machine for her business. She has promised to
make payments of $2000 after two years, $2500 after three years,
and a final payment after five years. What is the size of the last
payment, if interest is 8% compounded semiannually?
*Please use financial calculator method and show the values
being entered for PY, CY, I, N, PMT, FV, PV along with your final
answer*

3. George contributed $3500 per year for seven years into an
RRSP account earning 5.94% compounded semi-annually.
After the seven years, he stopped the
contributions, but left the money in the RRSP for another five
years, still at 5.94% compounded semi-annually.
a) How much does George have in his account at the end of this
twelve year period?
b) How much interest was earned over the 12 year period?
*Please use financial calculator method and show the
values being entered...

1) Congratulations, you just bought a new jacuzzi!
You have two payment options. Option 1 is to pay $3000 in one year
from today, $5,000 in two years from today, and $8,000 in three
years from today. Option 2 is to pay $15,000 today. Demonstrate
which is the better option for you if money is worth 5.00 % p.a.
simple interest. Don’t forget to state which is the better option
for you
*Please use financial calculator method and show the...

4. A manufacturer plans to produce a new type of T-tool. The
variable cost per unit is expected to be $78.00 and monthly fixed
costs are $2860.00. The unit selling price will be $130.00. Current
manufacturing capacity is 75 units per month. Answer the following
independent questions.
a)How many T-tools have to be sold per month to breakeven?
b) The manufacturer hires another worker to keep up with demand
and can now produce 513 T-tools per month. Variable costs per...

A great opportunity came up. You have a chance to get an
investment that pays $500 at the end of every six months for the
next three years. APR is 12%. Here is the trick, interest is
compounded quarterly. Find the PV of the investment
(Please breakdown answer using financial calculator, ex: PV, FV,
PMT, N, I and how you came up with each value...thanks!)

2. Mr. and Mrs. Rich are interested in
purchasing an annuity that will pay them $2,500.00 per month
starting next month for 25 years. If the best rate of return that
they could get is 4.65% compounded semi-annually, calculate using
both the algebraic and the calculator method,
a) how much should they pay now for this
annuity?
P/Y
C/Y
N
I/Y
PV
PMT
FV
b) Calculate the total interest paid over the
term of the annuity....

Time Value of Money
Overview: In corporate finance, students need
to be able to calculate present and future values of
investments.
Purpose: The purpose for this project is to
demonstrate an understanding of how to calculate present and future
values.
Requirements: Review the examples then answer
all of the questions below.
Example 1: What is the present value of the
$800 to be received 10 years from now discounted back to the
present at 10%.
Use your financial calculator to...

In
your answers, you should properly show your work by writing down
your entries into the calculator. For instance, if you use the TVM
worksheet of your financial calculator to compute how long it takes
to double your account balance given 5% annual interest rate, you
should write down your entries as: I/Y=5, PV=-1, PMT=0, FV=2, CPT
N=? --- the question mark here stands for your answer to the
question.
Question 6 – PV, Ordinary Annuity, Compounding [2 points]:
Find...

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...

1. The company uses Goldman Sachs for its investment banker and
Peter Fields, a Goldman Sachs managing director, has suggested that
McCormick consider on of two choices for financing. There is an
innovative hedge fund group that will loan $350 million to Mc
Cormick for 10 years in a zero interest bond. At the end, McCormick
will owe $550 million. The fee to Goldman will be paid by the hedge
fund. Use the PV function to calculate the
present value...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 6 minutes ago

asked 8 minutes ago

asked 12 minutes ago

asked 21 minutes ago

asked 35 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago