You are considering an investment of $ 1500 annually. The first payment is made now and the last payment is made at the end of year 3. The annual return on this investment is 3%. What is the future value at the end of year 4 of this investment?

You are considering an investment of $ 1500 annually. The first payment is made now and the last payment is made at the end of year 3. The annual return on this investment is 3%. What is the future value at the end of year 4 of this investment?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

See similar textbooks

Related questions

Q: Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for 5 years.…

A: IRR is the rate at which NPV of the project is zero. Using excel IRR function

Q: Consider an investment which pays $2,000 at the end of year 1, year 2, and year 3. In year 4, the…

A: Terminal value at end of year 3 = Cash flow in year 4 / (Interest rate - growth rate) = $5000 / (7%…

Q: You can invest $ 35,000 today. This investment offers you a fixed annual return, computed monthly…

A: Perpetuity is the series of payments at fixed intervals for an infinite time period. The amount of…

Q: You have an investment opportunity that requires an initial investment of $5,500 today and will pay…

A: The acronym IRR stands for internal rate of return. It shows the actual return wherein the present…

Q: Compute the future value of $536 invested every year if the appropriate rate is 11.2% and you invest…

A: Annual deposit (A) = $536 r = 11.2% n = 4 years

Q: You have an investment opportunity that requires an initial investment of $3,600 today and will pay…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: An investment will pay S100 at the end of each of the next 3 years, $200 at the end of Year 4, 300…

Q: Mr.Piyasoma is thinking of an investment which will pay cash flows of Rs.10,000 per quarter for the…

A: The value of an amount of money that will be paid on a future date is known as future value. As a…

Q: You wish to have an investment that will bring about $50 000 in ten years, and the rate of return is…

A: Value of investments after 10 years=$50,000Rate of return(r)=8%Time(n)=10 years

Q: EABL is considering an investment that will cost $80,000 and have a useful life of 4 years. During…

A: The payback period is the time taken by an investment to reach its Break-Even Point or in other…

Q: An investment offers $7,100 per year for 20 years, with the first payment occurring one year from…

A: When a fixed amount is received over the years, it is termed as annuity. To find the present value…

Q: An investment has a cost of $3500. The investment will have a payout at the end of the first year.…

A: Approach: Let's assume the desired minimum payout is P.We will roll out the yearly payout…

Q: What is the internal rate of return (IRR) of an investment that requires an initial investmen of…

A: Internal Rate of return is the rate at which the Net Present Value of the investment is zero. It can…

Q: An investment offers $8800 per year for 14 years with the first payment occuring one year from now.…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: A 10-year investment will pay $2,500 at the end of this year, and the payments will grow at a rate…

A: Answer: Given data, Future value = $2,500 Required rate of return = 15% Paymets grow @ 5% per year

Q: You are considering a one-year investment. If you put up $1,250, you will get back $1,350. What rate…

A: Here, Present Value of Investment (PV) is $1,250 Future Value of Investment (FV) is $1,350 Time…

Q: Consider an investment that offers $4,000, $5,000 and $6,000 in the next 3 years, with the first…

A: Present value is the concept of time value of money. Time value of money concept states that value…

Q: If the current rate of interest is 6% APR, what is the future value of an investment that pays AED…

A: Because of time value, the true worth of funds keeps on changing because of interest rate,…

Q: You are evaluating a project that will cost $500,000 but is expected to produce cash flows of…

A: To calculate the payback period we will use the below formula Payback period = Cost of…

Q: An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300…

A: Present value can be calculated by using this equation PV =FV(1+r)n where FV =Future value PV…

Q: Your company plans to invest $20,000 at the end of each year or years 1 through 5, The company will…

A: Present Value: It represents the present worth of the future amount and is computed by multiplying…

Q: value

A: Introduction: The payments that are made indefinitely or forever is referred to as perpetuity. In…

Q: Consider two investment projects, both of which require an upfront investment of $10 million and pay…

A: Capital budgeting is the process by which a corporation examines potential large projects or…

Q: i) To what sum will the investment grow at the end of 5 years? i) How much interest will be earned…

A: Given information is: A local University is planning to invest $500,000 every 3 months in an…

Q: How would you set up the function in Excel to get the IRR of an investment of $22,500 over 6 years,…

A: Internal Rate of Return: The Internal Rate of Return (IRR) is the required rate of return at which…

Q: An investment promises to pay 3500 per year for the next 3 years and then 4000 per year for the…

A: Year Income 1 3500 2 3500 3 3500 4 4000 5 4000 Discount rate = 15%

Q: An investment will pay $100 at the end of each of the next 3 years, $200 at the end of year 4, $300…

A: Both future value and present value of a series of payments needs to be calculated.Please refer to…

Q: An investment costs $465 and is expected to produce cash flows of $100 at the endof each of the next…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: If payback period is 5 years and the yearly cash inflows is $250 million, then the net initial…

A: The payback period refers to how long it takes to recover an investment's cost. An investment's…

Q: If you have an investment of $1000 that grows at a rate of 6%, compounded annually, how much will it…

A: The Future Value of this investment is computed to find the worth of the investment after 10 years.…

Q: What is the rate of return on an investment of $10,606 if the company will receive $2,000 each year…

A: The rate of return on an investment is the ratio of profits earned on an investment made by the…

Q: What is the present worth of the project, whichrequires $130,000 investment now and receives$40,000…

A: given, rate =14% Initial investment = $130,000 annual cashflow=$40,000 year=6

Q: An investment opportunity requires a payment of $750 for 12 years, starting a year from today. If…

A: We need to use the concept of time value of money to solve the question. According to the concept of…

Q: An investment of $80,000 is expected to generate a net annual income of $27,000 for 5 years. If the…

A: Present worth can be calculated by using this equation Net Present worth = -investment -…

Q: An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300…

A: Formulas:

Q: I need a detailed explanation and assistance to solve this problem: An investment offers $6,800 per…

A: a) Calculation of present value of investment at 7% required returnThe present value of investment…

Q: Consider an investment which pays $3,000 at the end of year 1, year 2, and year 3. In year 4, the…

A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: ou have been offered an investment that will pay you a lump sum of $30,000 25 years from today,…

A: Answer : Lump sum = $30,000 Interest rate = 6% Time = 25 years PV 6%, 25year = 1/1.06^25 = 0.233 PVA…

Q: You are considering investing $15,000 in a project today. This project will generate $6,500 per year…

A: Net present value calculation is one of the technique of capital budgeting, under which present…

Q: An investment offers $6,800 per year for 20 years, with the first payment occurring one year from…

A: Present Value: The present value is the concept that states an amount of money today is worth more…

Q: You have the opportunity to make an investment that costs $1.000,000. If you make this investment…

A: If an investment is able to cover the cost then we say that the investment should be accepted. But…

Q: You wish to have an investment that will bring about $20 000 infive years, and the rate of return is…

A: According to time value of money concept, the amount of dollar that is received today is more worth…

Q: An investment offers $5,300 per year, with the first payment occurring one year from now. The…

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

Q: An investment costs P465 now and is expected to produce cash flows of P100 at the end of each of the…

A: Time value of money- It is based on the concept that money earned today is worth more than similar…

Q: If you invest sh.100,000 at an interest rate of 15 percent, how much will you have at the end of…

A: Note: Hi! Thank you for the question, As per the Honor Code, we are allowed to answer one question…

Q: You are considering an investment product that is expected to generate an annual cash flow of $2,000…

A: Annual cashflow (A) = $2000 starting after 3 years Cost of investment in year 0 (C0) = $10000 C1 =…

Question

Video Video

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

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

How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one year from now and the rate is 8%?
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Consider an investment that offers $4,000, $5,000 and $6,000 in the next 3 years, with the first payment occurring one year from now. The required return is 7%. What is the present value of this investment?
An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of year 4, $300 at the end of year 5, and $500 at the end of year 6. If the rate of interest earned on the investment is 8%, what is the present value of this investment? What is its future value? How do you solve this with excel?
An investment opportunity requires a payment of $620 for 12 years, starting a year from today. If required rate of return is 6.00 percent, what is the value of the investment to you today?
You are trying to value the following investment opportunity: The investment will cost you $5663 today. In exchange for your investment you will receive cash payments in perpetuity. The first payment will occur after one year and will be $431. Afterwards, cash payments will grow by 1.3% annually. The applicable interest rate for this investment opportunity is 7.6% (effective annual rate. Calculate the NPV of this investment opportunity.
Consider an investment which pays $2,000 at the end of year 1, year 2, and year 3. In year 4, the investment will pay $5,000 and this payment will grow by 4.3% each year forever. If the appropriate interest rate is 7%, what is this investment worth today?
An investment will pay $150 at the end of each of the next 3 years, $300 at the end of Year 4, $600 at the end of Year 5, and incur a $500 cost at the end of Year 6. If other investments of equal risk earn 6.7% annually, what is this investment’s present value? Its future value?
You have an investment opportunity that requires an initial investment of $5,500 today and will pay $11,500 in one year. What is the IRR of this opportunity?
An investment pays you $1000 at the end of each of the next 3 years. The investment will then pay you $2000 at the end of Year 4, $3000 at the end of Year 5, and $5000 at the end of Year 6. If the interest rate earned on the investment is 8 percent, what is its present value? What is its future value?
Today (t=0), you invested the starting prinipal of 1536 dollars. At the end of the first, second and third years, you will receive payments in the amount of 40%, 45% and 50% respectively of your initital investment. What is the net present value (NPV) of the investment if the minimum attractive rate of return (MARR) is 7.8%. Calculate the MARR for an NPV between $0 and $1 and draw the cash flow diagram.
An investment will pay $150 at the end of each of the next 3 years, $300 at the end of Year 4, $600 at the end of Year 5, and incur a $500 cost at the end of Year 6. If other investments of equal risk earn 6.7% annually, what is this investment’s present value?