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lora16 [44]
2 years ago
15

You have been offered an investment that will pay you a lump sum of $30,000 25 years from today, along with a payment of $1,000

per year for 25 years starting one year from today. How much are you willing to invest today to have this investment in your portfolio assuming you wish to earn a rate of 6 percent compounded annually
Business
1 answer:
leva [86]2 years ago
6 0

Answer:

$5,793.40

Explanation:

The amount you invest is called the Principle Value (PV). Therefore the question requires us to determine the Principle Amount that will pay you a lump sum of $30,000 25 years from today.

<em>FV = $30,000</em>

<em>N = 25</em>

<em>PMT = ($1,000)</em>

<em>P/Yr = 1</em>

<em>I = 6 %</em>

<em>PV = ?</em>

Using a Financial Calculator to input the values as shown above, the Principle Value (PV) is calculated as $5,793.40.

Therefore, you will be willing to invest $5,793.40 today to have this investment in your portfolio

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Professional career typists

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People that can type fast usually use a type of keyboarding known as touch typing. Basically the person typing knows the location of each key by muscle memory.  This increases the speed of typing. But only professional career typists are the ones that can type or exceed 100 words per minute.

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A coal mine cost $ 1 comma 001 comma 000and is estimated to hold 57 comma 000tons of coal. There is no residual value. During th
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During the​ year, Sheldon Company had net credit sales of $ 47 comma 000. At the end of the​ year, before adjusting​ entries, th
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The balance of allowance for doubtful accounts is $ 1,880

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Your younger sister, Linda, will start college in five years. She has just informed your parents that she wants to go to Hampton
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The answer $6,964.4726324 per year  

Explanation: The following elements are to be considered in this case:

- The total amount required for Linda's education is $132,000 ($33,000*4)

-Parents had already started investing $5,300 per year for the past five years. This is a stream of even cash flows, at an interest rate. Considering we are at the point before our parents decided to invest the $5,300 and we want to determine the future value of this fixed payments, we will consider the formula below:

Future Value FV = Cash flow per period C * ([1 + i]^n - 1 )/i where  i is the interest rate and n the number of times or periods

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FV= $5,300 * 6.22780141

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Considering they will continue to save $5,300 for five more years, we can adjust the above formula and obtain the future value of the fixed payment of $5,300 over a period of 10 years

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- Cash Flow per period C = Future value FV/  ([1 + i]^n - 1 )/i

 C = $43,373.35248 /  ([1 + 0.11]^5 - 1 )/0.11

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Thus, in addition to the $5,300 currently being saved by our parents, they will have to save an additional $6,964.4726324 per year so as to obtain the total amount for Linda fees of $132,000 which will be divided into $33,000 per year.

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