Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,000 a year at the end of each of the next eight years 2. $50,250 (lump sum) now 3. $100,050 (lump sum) eight years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value annuity factor table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1

Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,000 a year at the end of each of the next eight years 2. $50,250 (lump sum) now 3. $100,050 (lump sum) eight years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value annuity factor table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,750 a year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $98,650 (lump sum) seven years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value (Click the icon to view the present value annuity factor table.) factor table.) (Click the icon to view the future value annuity factor table.) factor table.) (Glick the icon to view the future value Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1
Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,250 per year at the end of each of the next eight years 2. $50,100 (lump sum) now 3. $98,150 (lump sum) eight years from now (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? (Round the factors to three decimal places, X.XXX. Round the present value to the nearest whole dollar.) Present Value i - X Scenario 1: Requirements 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Round to the nearest whole dollar. 2. Would your preference change if you used a 12% discount rate? Print Done
Assume that you just inherited an annuity that will pay you $10,000 per year for 10 years, with the first payment being made today. A friend of your mother offers to give you $60,000 for the annuity. If you sell it, what rate of return would your mother’s friend earn on his investment? If you think a “fair” return would be 6%, how much should you ask for the annuity? What keys do I need to enter in a financial calculator to get the answers of (13.70%, $78,016.92)/ only show me the keys to enter in a financial calculaotr. not excel and not algebra
Your grandmother would like to share some of her fortune with you. She offers to give you money under one of the following scenarios (you get to choose): 1. $8,550 a year at the end of each of the next eight years 2. $48,350 (lump sum) now 3. $98,650 (lump sum) eight years from now Calculate the present value of each scenario using an 8% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value annuity factor table.) (Click the icon to view the future value factor table.) Using an 8% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1 $ 49,137 Present value of Scenario 2 $ Present value of Scenario 3 $ 48,350 53,271 Which scenario yields the highest present value? Scenario 3…
Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $8,550 per year at the end of each of the next seven years 2. $48,350 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirements 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar.
Using the time value of money Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): |1. $8,750 per year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $100,250 (lump sum) seven years from now Requirement 1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar. 2. Would your preference change if you used a 12% discount rate?
Assume that you just inherited an annuity that will pay you $10,000 per year for10 years, with the first payment being made today. A friend of your mother offersto give you $60,000 for the annuity. If you sell it, what rate of return would yourmother’s friend earn on his investment? If you think a “fair” return would be 6%, howmuch should you ask for the annuity? (13.70%, $78,016.92)
Your rich uncle has offered you two living trust payouts for the rest of yourlife. The positive cash flows of each trust are shown below. If your personalMARR is 10% per year, which trust should you select? Note: At 10% per year interest, infinity occurs when N = 80 years.
Your friend offers to pay you an annuity of $2,500 at the end of each year for 10 years in return for cash today. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? Please show your work in excel
Your friend offers to pay you an annuity of $9,300 at the end of each year for 3 years in return for cash today. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? Select the correct answer. a. $25,082.78 b. $25,058.78 c. $25,090.78 d. $25,066.78 e. $25,074.78
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An aunt gifts you with $12,000, but only after you invest it for one year. She givesyou two choices.1. Invest the entire sum at 4.2% compounded monthly.2. Invest $1000 at 7.1% each month in an annuity that pays every month.(a) What is the future value of the money invested with method 1?(b) How much interest is earned with method 1?(c) What is the future value of the money invested with method 2?(d) How much interest is earned with method 2?(e) Which method would you choose?

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