a) How much will this investment be worth after 10 years? (Round your answer to the nearest cent.) $ _____ b) What is the total amount earned in compound interest? (Round your answer to the nearest cent.) $ _____

a) How much will this investment be worth after 10 years? (Round your answer to the nearest cent.) $ _ b) What is the total amount earned in compound interest? (Round your answer to the nearest cent.) $ _

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 9EB: If you invest $15,000 today, how much will you have in (for further instructions on future value in...

See similar textbooks

Related questions

Q: How much should you be willing to pay for an account today that will have a value of $1,000 in 14…

A: Given: Particulars Value Years(NPER) 14 Interest rate (Rate) 11.90% Future value(FV) 1000

Q: Rose Garden’s is also considering selling preferred stock that pays dividends of $2.00 and has a…

A: Annual stock dividend (D) = $2.00 Flotation cost (F) = $10 Required rate of return (r) = 7% Tax rate…

Q: Determine which of the following two alternatives is the most efficient and which is the most…

A: Internal Rate of Return: It is the rate at which a project's or investment's net present value…

Q: A $5000 semi-annual coupon bond paying interest at 7.7%/year compounded semi-annually is redeemable…

A: The purchase price of the bond should be the minimum of the three prices determined at an 8.7% rate:…

Q: Calculate all three (see Problem 8.11) PW indexes (at i = 15%) for the following projects described…

A: Net present Value is the difference between Present Value of cash Inflows and Initial Investment.…

Q: The difference in yield between a credit-risky bond and a credit-risk-free bond of similar maturity…

A: Yields are income from investments such as: B. Benefits from holding securities. Yields are usually…

Q: ou have purchased a building for $12,000,000. There are ongoing NNN leases that will create a…

A: Acquiring a property: The acquisition of a building or property can be entirely financed by the…

Q: QUESTION 5 Because the maturity risk premium is normally positive, the yield curve must have an…

A: The Above Statement is 'False'.

Q: An Airline has been buying jet fuel. The company wishes to enter into futures market to buy jet…

A: Here, Correlation Coefficient between Kenya Shillings and USA Dollar is -0.32 Standard Deviation of…

Q: Dome Metals has credit sales of $450,000 yearly with credit terms of net 45 days, which is also the…

A: Average accounts receivable without providing discount of 2% = $450000×45/360 = $56250

Q: What is the annual operation and maintenance costs of owning this vehicle?

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

Q: 2. Alice wants to have $90,000 ten years from now. If her bank is paying 4.12% and compounds weekly,…

A: PV = FV / (1 + r / m)m*n FV = Future value = $90,000 PV = present value r = rate of interest =…

Q: Given the following information; Face Value = $50,000 Bond Rate = 4% Coupons per year = 2…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Determine the present value and total amount of an annuity with 6 payments of P120,000 each made at…

A: Annual payment (P) = P120,000 Interest rate (r) = 15% Number of annual payments (n) = 6

Q: You purchased a zero-coupon bond one year ago for $278.33. The market interest rate is now 8…

A: Data given:: Interest rate = 8% (compounding semiannually) Assumed Par value of bond = $1000…

Q: 1.Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to…

A: Effective Annual Rate: The effective annual rate of interest is the actual or the real rate of…

Q: hat is the maximal T2

A: Demand refers to the customer’s desire to buy goods and services and the willingness to pay price…

Q: Suppose that the continuously compounded risk-free interest rates for 1-year, 2-year, and 3-year…

A: A currency swap is an agreement in which two parties exchange the principal and interest of a loan…

Q: d. Calculate the variance and standard deviation of the portfolio assuming that the correlation…

A: The variance and standard deviation of a portfolio: The possibility that the actual outcome will be…

Q: Let's say you showed your friend Cardi all these calculations, and she went, "Man, this is screwed…

A: She can do: a. Ask her credit card company to shorten the duration of the loan. b. Make her payments…

Q: A piece of production equipment is to be replaced immediately because it no longer meets quality…

A: Particulars E1 E2 n 5 20 r 15% 15% Capital Investment -14000 -65000 PV of Salvage Value…

Q: You are trying to value the stocks of Imaginary Inc. The company is currently involved in a very…

A: Last year EPS = $10 EPS after year 1 = $15 EPS after year 2 = $20 EPS after year 3 = $25 Growth rate…

Q: Use the following to answer questions 11 – 15 AL issues 4.0%, 20-year bonds with a face amount of…

A: 14) As Bond's carrying value will increase by discount amortized each year, the bond liability…

Q: A company is looking at five different potential projects, but it can only do one of them. Which…

A: IRR of all projects is greater than the MARR (10%), hence we need to analyse the incremental IRRs.…

Q: Brans Co. is considering a $270,000 investment, which will provide net returns of $110,000,…

A: Year Cashflow Cumulative 1 -270000 -270000 2 110000 -160000 3 140000 -20000 4 220000 200000…

Q: For the following alternatives compute the Delta B/C ratio of Alternative D minus Alternative A. Use…

Q: Kyle wants $20,000 in 4 years. He can invest in a fund that earns 6% and compounds quarterly. How…

A: N - Number of Compounding Periods = 4 Years * 4 quarters = 16 I% - Annual Interest (as a %) = 6%…

Q: A or B.

A: Net present value shows the difference between the discounted cash inflows and outflows in a…

Q: From page 9-7 of the VLN, on December 31, 20XE after the company paid all of the interest payments,…

A: Company requires funding for their investment which can be obtained from broadly two sources.…

Q: 18. Given the information below, which bond(s) will be issued at a discount? Bond 1 Bond 2 Bond 3…

A: 18) The bond is issued or trades at discount when, Coupon rate (stated rate of return)is less than…

Q: Explain ONE cultural or economic development in the late twentieth century that would explain…

A: Economic development is the creation of wealth that realizes the interests of the community. More…

Q: 1.Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to…

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Q: Suppose you bought a bond with an annual coupon rate of 7.8 percent one year ago for $901. The bond…

A: Here, To Find: Part a. Total dollar return =? Part b. Total nominal rate of return =? Part c. Total…

Q: Louis is saving for his retirement by making annual end of year deposits for 30 years into a bank…

A: Future value of Annuity: It is the total value of annuity payments accumulated at a specific time…

Q: Stocks A and B have the following probability distributions of expected future returns: Probability…

A: Since question involves multiple subparts , we will answer 1st sub 3 parts for you as per prescribed…

Q: Bank of America Card uses 16account numbers, with the 16th digit being a formula check digitthe best…

A: Mastercard cards begin with a 5 and have a total of 16 digits. American Express cards have 15 digits…

Q: STRIPS are: a) Government-backed schemes that allow investors to hedge against market risk.…

A: STRIPS (Separate Trading of Registered Interest and Principal Securities) was established to give…

Q: Use the amortization table to determine how much interest is paid in the first 4 months of the loan.…

A: The interest in the first 4 months of the loan will be total of interest of month 1, month 2, month…

Q: Sarah needs RM 2,500 to pay for the deposit for her new car. How much should she borrow from her…

A: Let the amount to be borrowed = X n = 9 months = 0.75 years Discount rate (d) = 10%

Q: A company expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two,…

A: Cost of equipment maintenance in year 1 = $5000 Cost of equipment maintenance in year 2 = $5500…

Q: A deposit of $23844 now at an interest rate of 10% per year will accumulate in 10 years to an amount…

A: Deposit amount = $23844 Interest rate = 10% Period = 10 Years

Q: Lovely Dove Inc. paid $1 per share in dividend last year. It is expected that dividends will grow at…

A: The Supernormal Growth Model is the model in which the value of the stock is measured through its…

Q: Bold Vision, Inc. must purchase toner from a local supplier. The demand rate is 620 EP cartridges…

A: Each organization aims to optimize its raw material holding costs since it helps reduce the overall…

Q: The present worth of $5,000 in year 3, $10,000 in year 5, and $10,000 in year 8 at an interest rate…

A: Amount in year 3 = $5000 Amount in year 5 = $10000 Amount in year 8 = $10000 Interest rate = 0.13

Q: You have invested your annual bonus in a one year fixed deposit at Alpha Bank which offers a nominal…

A: The difference between simple interest and compound interest is simple interest only calculates…

Q: after a lengthy meeting with the marketing team about a new product being introduced, your boss asks…

Q: Regulation of Deposit Insurance rue or False: Prior to 1991, all U.S. banks pald the same rate on…

A: Given,

Q: As a parent, you want to secure the future of your only child who is now 5 years old. How much do…

A: Let the investment now = X Focal year = Age 17 Years for the investment to grow (n) = 12 Annual…

Q: Suppose that you invested $100 in a bank account that earned an annual rate of return of 10%. How…

A: Deposited amount (PV) is $100 Annual rate of return (r) is 10% Time period(t) is 10 years To Find:…

Q: Flotilla Beam, the owner of the Bay City Boatyard, recently had a brilliant idea. There is a…

Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

100%

Consider an investment where $49,000 is invested for 10 years at 8% compounded continuously.

a) How much will this investment be worth after 10 years? (Round your answer to the nearest cent.)

$ _____

b) What is the total amount earned in compound interest? (Round your answer to the nearest cent.)

$ _____

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
Find the future value if $7000 is invested for 6 years at 11% compounded annually. (Round your answer to the nearest cent.) $ Need Help? DETAILS MY NOTES What is the future value if $8200 is invested for 15 years at 10% compounded semiannually? (Round your answer to the nearest cent.) Need Help? Read It ASK W
Consider an investment where $45,000 is invested for 15 years at 8% compounded continuously. How much will this investment be worth after 15 years? (Round your answer to the nearest cent.) What is the total amount earned in compound interest? (Round your answer to the nearest cent.)
b. Calculate the present value of $5,000 received five years from today if your investment pays 6% compounded annually and 8% compounded annually. What do your answers tell you about the relation between present values and interest rates. Answer: b. (1) PV =
Assume that at the beginning of the year, you purchase an investment for $6,500 that pays $95 annual income. Also assume the investment's value has increased to $7,050 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.
(a) Find the present and future value of an income stream of $6000 per year for a period of 10 years if the interest rate, compounded continuously, is 2%. Round your answers to two decimal places. Present value = $ Future value $ (b) How much of the future value is from the income stream? How much is from interest? Round your answers to two decimal places. The amount from the income stream is $ The amount from the interest is $
Assume that at the beginning of the year, you purchase an investment for $6,300 that pays $130 annual income. Also assume the investment's value has increased to $6,900 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places. Rate of return % b. Is the rate of return a positive or a negative number? Positive Negative
If $18,000 is invested at 2.5% for 20 years, find the future value if the interest is compounded the following ways. (Round your answers to the nearest cent.) (g) continuously $ _____________(h) simple (not compounded) $_______________
Assume that at the beginning of the year, you purchase an investment for $7,200 that pays $100 annual income. Also assume the investment's value has decreased to $6,800 by the end of the year. (a) What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.) Rate of return % (b) Is the rate of return a positive or negative number? Positive O Negative
Suppose you wish to have $9,000 in 11 years. Use the present value formula to find how much you should invest now (in $) at 6% interest compounded semiannually in order to meet your goal. (Round your answer to the nearest cent.) $
Find the accumulated value of an investment of $15,000 for 5 years at an interest rate of 1.45% if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly d. compounded continuously. i Click the icon to view some finance formulas. a. What is the accumulated value if the money is compounded semiannually? (Round to the nearest cent as needed.) b. What is the accumulated value if the money is compounded quarterly? (Round to the nearest cent as needed.) C. What is the accumulated value if the money is compounded monthly? S (Round to the nearest cent as needed.) d. What is the accumulated value if the money is compounded continuously? S (Round to the nearest cent as needed.)
Suppose an investment will pay $7,000 in 44 years from now. If you can earn 6.15% interest compounded monthly by depositing your money in a bank, how much should you pay for the investment today?Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72. Group of answer choices