income, etc is required. The tax rate is 30%, the 100,000 2) Calculate EPS 1. Et
ID: 2565918 • Letter: I
Question
income, etc is required. The tax rate is 30%, the 100,000 2) Calculate EPS 1. Ethan Reed won a lottery that will pay him $450,000 at the end of each year for twenty years. Assuming an appropriate interest rate is 5% compounded annually, what is the 2. You have been asked to decide whether it is advantageous for the company to purchase 3. Morgan invested $75,000 she received from her grandfather today in a fund that is amount (disregarding taxes) that he could collect today? a building for $800,000 or to lease i for $65,000 for 20 years assum of 5%. Please show your work. uming an interest rate expected to earn 10% per annum. To what amount should the investment grow in ten years if interest is compounded semi-annually? 4. What would you pay for a bond that pays you $10,500 at the end of each year for the next ten years and then returns a maturity value of $150,000 after ten years? Assume that the relevant interest rate for this type of investment is 8%. 5. Lori wishes to invest $15,188.50 at the end of each year in order to pay off a $220,000 note. Assuming she is able to earn 8% how many years will debt. ake Lon to pay off the See table of relovant factors at end of exam interest Periods Factor PVI 5% 201 0.37689 PV oa FVI FVI 5820 12.46221 5%| 201 2.6533 5% 5% 10% 10 1.62889 10 0.61391 10 0.38554 PVI FV1 FV oa PV 10% 10 2.59374 10 15.93743 1016.71008 10 14.48656 10 0.46319 10 2.15892 10% 8% FV oa PV1 8% FV1Explanation / Answer
These are multiple questions with parts which are not related to each other and hence we are supposed to answer only first question.
PV of annuity for making pthly payment P = PMT x (((1-(1 + r) ^- n)) / i) Where: P = the present value of an annuity stream PMT = the dollar amount of each annuity payment r = the effective interest rate (also known as the discount rate) i=nominal Interest rate n = the number of periods in which payments will be made Annual payment 450,000 Years 20 Interest rate 5% Present value =450000*(((1-(1 +5%) ^-20)) /5%) Present value 5,607,995 So this present value is the sum which he can collect todayRelated Questions
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