5. What is the Capitalized Worth, when i= 10% per year, of $3000 per year, startıng in one yea continuing forever; and $5,000 at the end of fourth year, repeating evervy five years thereafter, and continuing forever. a) $4,4009 b) $5,9009 c) $3,9009 d) $3,4009 e) $5,4003

5. What is the Capitalized Worth, when i= 10% per year, of $3000 per year, startıng in one yea continuing forever; and $5,000 at the end of fourth year, repeating evervy five years thereafter, and continuing forever. a) $4,4009 b) $5,9009 c) $3,9009 d) $3,4009 e) $5,4003

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 11EA: How much would you invest today in order to receive $30,000 in each of the following (for further...

See similar textbooks

Related questions

Q: Oscar was given a credit card with an APR of 21%. What was his monthly periodic rate? A. 21% B. 2.1%…

A: APR is annual rate of return calculated considering 12 months credit period. To calculated monthly…

Q: In one year: Firm XYZ will earn $90 if its businesses perform well. The Firm owes a $60 payment to…

A: Data given: If business performs well : payment due to creditors= $60 (Chance 50%) If business…

Q: Melvin availed a loan from a bank that gave him an option to pay Php 25,700 monthly for 2 years. The…

A: In this Question, we have information i.e. Melvin availed a loan from a bank and he can repay the…

Q: True or False. 1. Financial goals can be classified as to timing and purpose. 2. Consumable-product…

A: Financial goals- are the target i.e., saving target, spending target , investment target, etc., set…

Q: The cost price of 35 pairs of sport shoes was $350 per pair. AG Sport Center plan to sell all the…

A: Concept. Gross profit = selling price - cost of goods sold. Hence , Selling price = gross profit +…

Q: You borrow $700,000 at 3% interest for 30 years on a mortgage. What is your monthly payment?…

A: To calculate the monthly payment we will use EMI formula as follows: Monthly payment =…

Q: compute the rate of return.

A: Accounting rate of return (ARR) refers to a financial ratio which is used by the company to compute…

Q: Speculating with Currency Call Options. ABC Inc., purchased 75,000 units call option on British…

A: Answer - Calculation of Profit per Unit on Exercising the Option - Exercise Price - $…

Q: 3) What three things are required to make revenue management work AND why?

A: Revenue management is referred as the disciplined analytics application, which helps in prediction…

Q: The following details were summarized for National Corporation: Year 2017 Per Share Dividend P2.99…

A: Here, Current Market Price is P62 Issuance Expense per Share is P2.00

Q: 10. Scott bought a $5,975 boat on the installment plan. The agreement included a 20% down payment…

A: In the installment purchase system, part of the price is paid upfront called 'Down payment'. Rest is…

Q: Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909…

A: When we need to compute the PV of any future sum receivable at a specific point in time, we use the…

Q: . Faith is taking out an $7,500, 1½-year loan with an APR of 8.75%. What is the monthly payment for…

A: Loans are paid by the monthly equal installments and these carry the payment for principal and also…

Q: Maxwell Feed & Seed is considering a project that has the following cash flow data. What is the…

A: IRR is the rate at which Present value of cash Inflows is equal to Present Value of cash Outflows.…

Q: |Company 2019 Gross $4,250,000 Revenue Company 2019 Gross $1,620,000 Profit Annual Retention Rate…

A: Customer Lifetime value = M(1+d/1+d-r)where,M= Margin d= discount rater = retention ratio CLV =…

Q: Use the following information for the next three questions. Instrument Corp. has the following…

A: Available for sale security (Non-Trading Investment): It is a a debt or equity instrument which is…

Q: The capital budgeting director of Sparrow Corporation is evaluating a project that costs $200,000,…

A: IRR signifies the rate of return at which the NPV is zero. This signifies what rate of return is…

Q: You take out a loan in the amount of $271,000 with annual equal repayments over the next 20 years.…

A: Annual Payment = P / ((1-(1+r)-n)/r) Where P = Principal Amount r = Rate of interest n = Numbers…

Q: Corporation Ltd. have 6% coupon bonds traded on the market that have 5 years left to maturity. The…

A: In calculation of the present value of cash inflows we may use discounting factor. On the basis of…

Q: Sololo Sloes has sold a home to the American First Family in Nairobi Karen area for $12 million. The…

A: Foreign Exchange risk: It is a financial risk that exists when a monetary exchange is designated…

Q: COMPOUND INTEREST (a) Find the simple interest on 60,000 for one year at 10%. (b) Find the compound…

A: a) Simple Interest = Principal * Interest rate * Time period = 60,000 * 10% * 1 year = 6,000

Q: firm has zero debt in its capital structure. Its overall cost of capital is 10%. The firm is…

A: Weighted average cost of capital = (weight of Debt * Cost of debt) + (weight of Equity * Cost of…

Q: A new drill press is being considered to purchased. The estimated first cost is Php 200,000. The net…

A: IRR is the discount rate that makes the present value of cash inflows equal to initial investment…

Q: 1. John approached you with a business proposition to invest in a project. The Annual Cash Flows…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: Damron, Incorporated, has 205,000 shares of stock outstanding. Each share is worth $79, so the…

A: The ex-rights price is the market price of shares after the issuance of new rights shares. Due to an…

Q: The interest rate is 5% per year. Year Cash flow, $ 150 150 + G 150+2G Year 4 5. Cash flow, $ 150+3G…

A: The present value of both cash flow must be equivalent to each other considering the time and…

Q: 4.18 The Punch Bowl Corp. produces and sells two products, P and B. In prior year, Punch Bowl has…

A: In the case of multiple products being sold, we compute the break-even point for the company…

Q: O puts; 625 contracts.

A: Hedge refers to the risk management strategy employed to cover the loss in investments by opting for…

Q: How incrising minimun wages affect compensation ?

A: Raising the minimum wage would make hiring low-wage workers more expensive. As a result, some…

Q: Question 1 Living Colour Co. has a project available with the following cash flows: Year Cash Flow…

A: Year Cash flow 0 -$34,430 1 $8,090 2 $9,730 3 $13,840 4 $15,770 5 $10,580 Required…

Q: A & B D. Consider a port folio of E CRA) : 207. E CR): 30% 2. assets where nsky = 10% A,B :20% hnd…

A: Solution:- Minimum Variance Portfolio is that portfolio in which the weights of securities are such…

Q: Which of the following is not an assumption made by Modigliani and Miller in relation to the…

A: The question is related to theories of Capital Structure. As per MM Approach, a change in…

Q: The classified balance sheet for company reporte current assets o $1,688,830, tota abilities of…

A: Current ratio = Current assets/current liabilities

Q: eristics?

A: Step 1 Risk is defined as an occurrence that harms financial performance and/or reputation as a…

Q: Which one of the following statements is correct? If NPV is positive, IRR will be less than…

A: Bartleby Honor Code suggests when multiple questions are asked, the expert should solve only the…

Q: Consider an annual 2 year coupon bond paying a coupon rate of 7%. If it is 1000 par and the YTM= .06…

A: Face Value $ 1,000.00 Coupon Rate 7% YTM 6% Time Period 2 Part D Par…

Q: Bob wants $300,000 in his retirement account when he retires in 30 years. How much does he need to…

A: This question can be answered in light of future value of annuity. Annuity is a payment of equal…

Q: True or False 1. The first step in the personal financial planning process is determining one's…

A: Financial planning is defined as the step by step approach for meeting the life goals of an…

Q: 1) The financial management decisions can be classified into four basic kinds, Investment Decisions,…

A: The Financial management decision are classified into 3 kinds. 1. Investment Decisions 2 Financing…

Q: A stock has an expected return of 8% and a volatility of 9%. The stock is currently traded at price…

A: The following information has been provided in the question" Stock Price =$30 Exercise or Strike…

Q: 1) Cost of common stock equity: CAPM Brigham Jewellery Corporation common stock has a beta, β, of…

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

Q: 4.13 A company produces and sells two products at unit contribution margins of P4 for A and P10 for…

A: Break-even point is that production and sale level at which the company recovers all its cost…

Q: The following information pertains to Havana Corporation's defined benefit pension plart 2021 2022…

A: We can calculate the service cost in the year 2021 by applying the required formula by taking the…

Q: Investment required Present valae of cash infows NPV Usefl e of the project A $260,000 $505,900…

A: We know that profitability index can be calculated as follows = Present Value of Cash inflows /…

Q: Hail & Sons operates for 240 days in a year. It has been offered credit terms of 4/30, net 90 days.…

A: Credit term refers to a method used by the firms to encourage buyer or debtor to pay the amount of…

Q: An engineer who is about to retire has accumulated $50 000 in a savings account that pays 6% per…

A: Present Value of Ordinary Annuity refers to the concept which dictates the discounted value of a sum…

Q: t 2 of 3-B Suppose the following model describes changes in Company ABC's sales: AABCt = 0.078 -…

A: The sales growths are changing and change in sales depends on the change in sales of previous change…

Q: Burns Company's bonds have a $1,000 face value, pay an 10% coupon, and mature in 30 years. What is…

A: Face value of the bond = $1,000 Coupon rate = 0.10 Annual coupon amount (C) = $100 (i.e. $1000 *…

Q: A horizontal merger takes place between companies operating: a. At different stages of the…

A: Solution: When two or more entities start working by coming together, it is called a merger. There…

Q: Hail & Sons operates for 240 days in a year. It has been offered credit terms of 4/30, net 90

A: Cost of non free credit would be the cost of discount given to the customer for doing early payment.

Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

5- What is the Capitalized Worth, when i 10% per year, of S3000 per year, starting in one year and
continuing forever; and $5,000 at the end of fourth year, repeating every five years thereafter, and
continuing forever.
a) $4,4009
b) $5,9009
c) $3,9009
d) $3,4009
e) $5,4003

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 3

VIEW

Step by step

Solved in 3 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

What is the present worth (P) of all the cash flows if F=16000, n=6 years, and i= 8% per year? Select one: O a. $16,480.00 b. $103,824.00 O c. $10,082.71 O d. $34,608.00
Question (2): What is the capitalized worth, when = x1% per year, of 700 per year, starting now and continuing forever, and $10X2 in year five, repeating every four years thereafter, and continuing forever? X1=4% X2=700$
7. The present worth of a cash flow of $1,000 that occurs every 10 years forever, with the first one occurring now with i% per year is: a. $1,000+ {$1,000 x (A/F, i%, 10) / i%} b. $1,000+ (($1,000/i%) × 10} c. $1,000 (A/F, 1%, 10) / 1% d. $1,000+ $1,000 x (A/P, 1%, 10)/1%}
1 (1+r)" 3. Present Value: P = FV- or P = F(1+i) -n a) Find the present value of P8,000 due in four years at 8% compounded semi-annually b) P22,500 is due in 6 years at 12% compounded annually. Determine the present value c) Find the present value of each of the following: aa. P28,300, 8% every 6 months for 5 years bb. P27,500, 12% monthly. Terms, 3 years and 7 months cc. P83,900, 10% quarterly, Terms, 6 years and 9 months dd. P71,520, 7% semi-annual for 12 years ee. 68,900, 6% annually for 15 years.
5) What is the present value (PV) of $50,000 received twenty years from now, assuming the interest rate is 6% per year?A) $32,500.00B) $13,251.70C) $15,590.24D) $27,282.92
What will be the future value of $5 000 invested for six years at 8% per annum compounded annually? Select one: a. $7 543.46 b. $7 923.37 c. $7 934.37 d. $6 532.81
1. At what rate must RM50,000 to grow to 406,855 in 15 years compounded annually? Select one: a. 19% b. 20% c. 18% d. 15% 2.How long RM152,091.826 grow to RM708,900 with a 8% compounded annually? Select one: a. 12 years b. 15 years c. 20 years d. 10 years 3.If you deposit RM15,000 in an account earning 12%, how much would you have in the account after 15 years? Select one: a. RM87,869 b. RM83,456 c. RM82,104 d. RM82,879 4.If you deposit RM3,305 in an account earning 12%, how much would you have in the account after 15 years? Select one: a. RM18,090 b. RM23,456 c. RM12,879 d. RM17,869 5.If you deposit RM5,072 in an account earning 9%, how much would you have in the account after 15 years? Select one: a. RM18,474.76 b. RM17,869.90 c. RM12,879.67 d. RM23,456.89
What is the capitalized cost of $60,000 in year 0, $150,000 in year 2 and a uniform annual amount of $50,000 per year forever, beginning in year 5? Use an interest rate of 10% per year?
What is the future value of $3,078 invested for 8 years at 6 percent compounded annually? Multiple Choice $7,819.20 $7,621.01 $3,885.90 $4,905.86 $3,899.12
2. What's the present value of $25,000 received after 5 years if the appropriate interest rate is 10%, compounded annually?* O a) $13,620 O b) $19,690 O c) $1,670 d) $15,523 e) None of the above 3. What's th
Assuming that money is worth 10%, compute the present value of: 1. The obligation to pay $9,000 at the end of each of the next 10 years. $Answer 2. The right to receive $18,000 at the end of the 7th, 8th, 9th, and 10th years from today. $Answer
Present Value Computations Assuming that money is worth 10%, compute the present value of: 1. $15,000 received 15 years from today. $ 2. The right to inherit $4,250,000 14 years from now. $ 3. The right to receive $11,000 at the end of each of the next six years. $ 4. The obligation to pay $10,000 at the end of each of the next 10 years. $ 5. The right to receive $19,000 at the end of the 7th, 8th, 9th, and 10th years from today. $