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3 years ago

The fair rate is 8%. What is 100 per year, forever, worth now?

Business

2 answers:

iVinArrow [24]3 years ago

7 0

Answer: Please refer to the explanation section

Explanation:

Investment = 100

Interest rate = r = 8%

1. Value of a Perpetual (forever) investment

Present Value = Investment/r = 100/0.08 = 1250

Present Value = $ 1250

2. Present Value with a period of 15 years

Present Value = Investment/(1+r)^n

Present Value = 100/(1+0.08)^15 = 31.524170497

Present Value = $ 31.52

3. Present Value of a Perpetual (forever) investment with Growth rate of 5%

Present Value = Investment/r = 100/0.08 – 0.05 = 3333.333333

Present Value = $ 3333.33

4. Future Value if we get 100 at the end of the year

Future Value = investment(1+r) = 100(1+0.08) = 108

Future Value = $ 108

5. Future Value if we get 100 at the end of 10 years

Future Value = investment(1+r) = 100(1+0.08)^10 = 251.524170497

Future Value = $ 251.52

6. Future Value if 100 is reinvested every year for 10 years

Future Value = Payment x [(1+r)^n – 1)/ r]

Future Value = 100 x [(1+0.08)^10 – 1)/ 0.08)

Future Value = 1448.6562466 = $ 1448.66

777dan777 [17]3 years ago

5 0

Answer:

1. $1,250

2. $855.95

3. $3,333.33

4. $92.59

5. $46.32

6. $671.01

Explanation:

$100 per year forever

Constant Cash flow every year forever is actually a perpetuity its present value is

PV of Perpetuity = Cash flow / rate of return

PV of $100 Perpetuity = $100 / 0.08 = $1,250

$100 per year for 15 years

Constant Cash flow every year for specific time period is actually a Annuity its present value is

PV of annuity = P + P [ ( 1 - ( 1 + r )^-n ) / r ] = $100 + $100 [ ( 1 - ( 1 + 0.08 )^-15 ) / 0.08 ] = $855.95

$100 per year grow at 5% forever

It is a growing perpetuity and its present value will be calculated as follow

Present value of growing perpetuity = Cash flow / Rate of return - growth rate

Present value of growing perpetuity = $100 / 0.08 - 0.05 = $3,333.33

$100 once at the end of this year

Present value = P ( 1 + r)^-n = $100 ( 1 + 0.08 )^-1 = $92.59

$100 once after 10 years

Present value = P ( 1 + r)^-n = $100 ( 1 + 0.08 )^-10 = $46.32

$100 each year for 10 years @ 8%

PV of annuity = P + P [ ( 1 - ( 1 + r )^-n ) / r ] = $100 + $100 [ ( 1 - ( 1 + 0.08 )^-10 ) / 0.08 ] = $671.01

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Anettt [7]

Answer:

Given that,

Durable Goods = $1,250

Non-durable Goods = $2,130

Services = $9,000

Fixed Investment = $1,800

Changes to Business Inventory = $135

Investment in Stocks & Bonds = $15,500

Federal Government Purchases = $1,800

State/Local Government Purchases = $1,700

Transfer Payments = $675

Exports from the United States = $2,100

Imports into the United States = $2,400

(a) Consumption, C = durable goods + non-durable goods + services

= $1,250 + $2,130 + $9,000

= $12,380

(b) Private investment, I = Fixed investment + change in inventory + Investment in stocks/bonds

= $1,800 + $135 + $15,500

= $17,435

(c) Government spending, G = Federal government purchase + state/local government purchase

= $1,800 + $1,700

= $3,500

(d) Net exports = Exports - Imports

= $2,100 - $2,400

= -($300)

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= $33,015

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3 years ago

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3 years ago

When Bill is alone with Sally, he apologizes by saying, "I'm sorry about getting angry yesterday. I should have informed you soo

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This question comes with these answer choices:

a. remedy.

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<h2>Solution</h2>

Saying sorry is not enough in most cases. The apology should include efforts to remedy or reduce the harm caused. Some kind of compensation.

Bill should find out what consequences his action had on Sally, and thus try to compensate in a way that the negative consequences are eliminated or minimized: is it necessary to replace something?, is it necessary to pay for monetary loss?, are feelings hurt, so that you need to change your behavior to remediate the situation?

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3 years ago

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Answer:

Answer to this question is explained below in detail.

Explanation:

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a) Briefly describe the differences among international bond, bank and equity markets.

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Solution:

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3 years ago

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