Answer:
FV= $269,489.09
Explanation:
Giving the following information:
Monthly payment= $200
Interest rate= 0.075/12= 0.00625
Number of periods= 30*12= 360
To calculate the future value, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
FV= {200*[(1.00625^360) - 1]} / 0.00625
FV= $269,489.09
An insurance settlement of $2.5 million must replace Trixie Eden's income for the next 45 years. What income will this settlement provide at the end of each month if it is invested in an annuity that earns 7.5%, compounded monthly
Answer:
$16,184.66
Explanation:
The computation of the income that needed at the end of the each month is shown below:
Here we use the PMT function
Given that
Present value = $2,500,000
NPER = 45 × 12 = 540
RATE = 7.5% ÷ 12 = 0.625
FV = $0
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;TYPE)
After applying the above formula
The present value comes in negative
The monthly payment is $16,184.66
Consumption spending is:__________ A. spending by households, businesses, and government on all goods used up within one year. B. spending by individuals and households on both durable and nondurable goods. C. spending on goods and services by heads of households. D. spending by individuals and households on only nondurable goods, since they are used up quickly.
Answer:
b. spending by individuals and households on only non-durable goods.
Explanation:
Consumption spending is spending by individuals and households on only non-durable goods. Consumption is a component of GDP which includes spending on goods and services by individuals and households as it includes non-durable as well as durable goods on the basis of consumption patterns.
Consider the following cash flows: Year Cash Flow 0 –$ 33,000 1 13,400 2 18,300 3 10,800 What is the IRR of the cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
14.23%
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
Cash flow in year 0 = –$ 33,000
Cash flow in year 1 = 13,400
Cash flow in year 2 = 18,300
Cash flow in year 3 = 10,800
IRR = 14.23%
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
Grant, Inc., is a fast growth stock and expects to grow at a rate of 25 percent for the next four years. It will then settle to a constant-growth rate of 10 percent. The first dividend will be paid out in year 3 and will be equal to $5.00. If the required rate of return is 18 percent, what is the current price of the stoc
Answer:
the current price of the stock is $50.59
Explanation:
The computation of the current price of the stock is shown below:
= $5.00 ÷ (1 + 18%)^3 + ($5.00 × (1 + 25%)) ÷ (1 + 18%)^4 + (($5.00 × (1 + 25%) × (1 + 10%)) ÷ (18% - 10%)) ÷ (1 + 18%)^4
= $50.59
Hence, the current price of the stock is $50.59
The same is to be considered by taking all the things given in the question
A taxable bond has a yield of 8%, and a municipal bond has a yield of 6%. At what tax bracket, would you be indifferent between the 2 bonds
Answer: 25%
Explanation:
Municipal bonds are tax-free which means that the tax bracket that would make you indifferent between the 2 bonds would be the one that brings the after-tax yield on the taxable bond to the same yield as the Municipal bond.
Assume this tax rate to be x.
8% * ( 1 - x) = 6%
8% - 0.08x = 6%
0.08x = 8% - 6%
x = (8% - 6%) / 0.08
x = 25%