At this interest rate, the present value of the increase in wages is about the training. Thus, from a strictly monetary viewpoint, you than the present value of the total cost of which is participate in the training program.
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- Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alex and Spenser each invest $50,000 in the same year. Alex invests in a no-load fund (that doesn’t charge the 0.25% fee) and earns 5% a year. Spenser uses another retirement fund that charges the 0.25% fee and so only earns 4.75%. After 30 years, how much more will Alex have than Spenser?Suppose that you are considering an investment, which would require you to pay $1,000 up front (today), and you would receive a payment of $100 per year, for 5 years, beginning one year from now. One year after your fifth payment, you would then have $800 paid to you as a final payment. Assume that the interest rate is equal to 5%. Round all answers to two decimal places. 5. Calculate the Present Value (PV) of the cost and each of the payments for the investment. Does this investment have a positive or negative present value? Should you make this investment? 6. How much would the initial cost ($1,000) need to change for you to be exactly indifferent about this investment? (i.e. you receive the same return for making this investment as you do for not making this investment?)Economics In 54 months time you expect a cash flow of $3 million. Calculate it’s present value (PV) given the 54-month interest rate is currently 4%, with a volatility of 120 basis points (bps). Explain, using equations with properly-defined mathematical notation, how to map this cash flow to vertices at 4 years and 5 years, in such a way that the volatility of the present value of the mapped cash flow remains at 120 bps. Suppose the 4-year rate has a volatility of 110 bps and the 5-year rate has a volatility of 150 bps, and their correlation is 0.9. How much should be mapped to each vertex. Give your answer in PV terms and round your answers to whole $ values.
- 1. How much is the total value of all these presents worth today?2. How much is the future value of all these presents at the end of 12 years?3. If Tita Rhea agrees to give her these amounts annually forever, how much is its total value worth today?4. If the presents are each made continuously throughout the year at a rate of P, multiply the present value in #7 by a suitable adjustment factor (d/δ) to determine its total present value. Type the resulting amount below.Give typing answer with explanation and conclusion You have opened your own word-processing service. You bought a personal computer, and paid $5,000 for it. However, due to the cost changes in the computer industry, the current price of an equivalent machine is $2,500. You could sell any used machine for $1,000. If you were not word processing, you could earn $20,000 per year at an alternative job. Assume that the interest rate is 10%. You can also hire an assistant who can do everything that you can do for $20,000 per year (you would still continue to do word processing). One person using one computer can produce 11,000 typed pages per year, and the price per page for your service is $2. You are considering three options: (A) expand your business by hiring an assistant; (B) leave your business the way it is; (C) shut down. Fill in the Blank For Option B, economic profit is $_______.Suppose that you earn $320 in year 1 and will ean $720 in year 2. If you borrow money against your future income you will have and additional $576 to spend in year 1, and if you lend all of your current income you will have and additional $400 to spend in year 2. In both years you consume only food which costs $1 per kilogram in each year. What is the interest rate that you borrow and lend at? R= Let your MRS for food in year 1 with food in year 2 be given by the formula where F is the amount of food consumed this year and F is the amount of food consumed next year. Calculate your consumption bundle: F = F = Suppose the interest rate at which you can borrow and lend changes to 20%. Calculate your new consumption bundle: F = F2 = Which interest rate is preferred? The initial interest rate found in part 1 O The new interest rate, 20%
- Draw the cash flow diagram with your solution.In a certain department store, the monthly salary of a saleslady is partly constant and partly varies with her sales for the month. When the value of her sales for the month is P10,000, her salary for the month is P900. When her salary for the month goes up to P12,000, her monthly salary becomes P1,000. What must be the value of her sales for the month so that her salary for the month will be P2,000?Suppose Latasha is a sports fan and buys only baseball caps. Latasha deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a baseball cap is priced at $10.00. Initially, the purchasing power of Latasha's $3,000 deposit is baseball caps. For each of the annual inflation rates given in the following table, first determine the new price of a baseball cap, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Latasha's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest baseball cap. For example, if you find that the deposit will cover 20.7 baseball caps, you would round the purchasing power down to 20 baseball caps under the assumption that Latasha…is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. The present value of a loan in which $1000 is to be paid out a year from today with the interest rate equal to 1% is $. (Round your response to the neareast two decimal place) If a loan is paid after two years, and the amount $1000 is to be paid then with a corresponding 2% interest rate, the present value of the loan is $. (Round your response to the neareast two decimal place) Next 11:41 AM
- Joanne has just completed high school and is trying to determine whether to go to communtiy college for two years or go directly to work. Her objective is to maximize the savings she will have in the bank five years from now. If she goes directly to work, she will earn $18,500 per year for each of the next five years. If she goes to community college, for each of the next two years she will earn nothing—indeed, she will have to borrow $6,000 each year to cover tuition and books. This loan must be repaid in full three years after graduation. If she graduates from community college, in each of the subsequent three years, her wages will be $35,000 per year. Joanne’s total living expenses and taxes, excluding tuition and books, equal $15,000 per year. Joanne should go to (Click to select) work junior college , since the total value of Joanne's savings would be $__ if she goes directly to work and $__ if she goes to community college.The Fly-by-Night finance company advertises a "bargain 6% plan" for financing the purchase of automobiles. To the amount of the loan being financed, 6% is added for each year money is owed. This total is then divided by the number of months over which the payments are to be made, and the result is the amount of the monthly payments. For example, a woman purchases a $10,000 automobile under this plan and makes an initial cash payment of $2,500. She wishes to pay the $7,500 balance in 24 monthly payments: Find the IRR and Effective Annual Interest rate. Purchase price -Initial payment = Balance due, (Po) +6% finance charge = 0.06 × 2 years × $7,500 = Total to be paid .. Monthly payments (A) = $8,400/24 = $10,000 2,500 7,500 900 8,400 $350Suppose that Anna's college education would cost around $500,000 when they enter college in 15 years. At present, She have $100,000 to invest.What annual interest must she earn on her investment to cover the cost