1. A certain property is being sold and the owner receives two bids. The first bidder offered to pay $400,000 each year for 5 years, each payment is to be made at the beginning of each year. The second bidder offer to pay $240,000 first year, $360,000 the second year, and $540,000 each year for the next 3 years, all payments will be

1. A certain property is being sold and the owner receives two bids. The first bidder offered to pay $400,000 each year for 5 years, each payment is to be made at the beginning of each year. The second bidder offer to pay $240,000 first year, $360,000 the second year, and $540,000 each year for the next 3 years, all payments will be

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 1CQQ

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5. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 for the first year, P150,000 the second year, P180,000 the third year P200,000 each year for the next 2 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should the owner of the plant accept? Show cashflow diagram.
1. How much would be in your account in 10 years after depositing $2000 now? The annual interest rate is 8% 2. How long will it take $500 to reach $10,000 when it grows at 8 percent per year? 3. At age 15 you invest $5,000 into a mutual fund. If you gain 25000 at age 40, the annual interest rate is?
1. Engr. Dela Cruz, the buyer of a certain equipment may pay either in 4,000.00 cash down paymentand 2,000.00 annually for the next 6 years, or pay 5,000.00 cash down payment and 2,000.00 annuallyfor the next 5 years. A.) What type of annuity are the options of Engr. Dela Cruz?B.) If money is worth 12% compounded annually, which method of payment is better for Engr.Dela Cruz and how much?
Question 1 Due to health reasons, Dave is considering early retirement. He currently has $700,000 in a self- managed retirement fund. He thinks he will need S40,000 per year during retirement. He intends to invest his retirement in a low-risk mutual fund which return 1.5% per year. How many years can he live off this retirement fund without the need to look for a job?
2. A loan of $25,000 was repaid at the end of 9 months with $28,500. What annual rate of interest wascharged?3. If an investment company pays 16% compounded quarterly, how much should you deposit to have $5,000two years from now?
100,000 invested today in a fund that pays 25% interest compounded annually. 3 yrs later, you borrow 50,000 with interest of 20% annually in a bank and invest to the fund. 2 yrs later, you withdraw enough money from the fund to repay the bank loan and all interest due on it. 3 yrs from this withdraw you start taking 20,000 per year in the fund. After 5 withdrawals, you withdraw the balance in the fund. How much was withdrawn? a. 1.9 Million b. 1.3 Million c. 1.6 Million d. 1 Million
4. A house & lot is offered for sale, the seller offers 3 methods of payments: a. P500,000in cash b. P100,000 down-payment and P10,000 monthly installments for 4 years. c. P160,000 down-payment and P8,000 monthly installments for 4 years. If money is worth 12% compounded monthly, which is the most economical method of payment?
What should be the price of a 8year zero-coupon bond with a face value of $1000 where zero-coupond bonds yield 6% interest?
A zero-coupon bond has a yield to maturity of 5% and a par value of $1,000. If the bond matures in16 years, it should sell for a price of __________ today.
Write the formula which is used to calculate the annual effective yield?
Capital Compound Amount Factor Compound Amount Factor Sinking Fund Factor me nearest dollar.) Present Worth Factor Recovery Factor Present Worth Factor To Find P To Find A To Find A To Find F Given P F/P To Find P Given F To Find F Given A FIA Given A Given F Given P N. P/F PIA A/F A/P 1.0300 0.9709 1.0000 0.9709 1.0000 1.0300 1.9135 0.4926 0.5226 2.0300 3.0909 4.1836 1.0609 0.9426 1.0927 0.9151 2.8286 0.3235 0.3535 4 1.1255 0.8885 3.7171 0.2390 0.2690 1.1593 0.8626 5.3091 4.5797 0.1884 0.2184 6 1.1941 0.8375 6.4684 5.4172 0.1546 0.1846 1.2299 0.8131 7.6625 6.2303 0.1305 0.1605 8 1.2668 0.7894 8.8923 7.0197 0.1125 0.1425 7.7861 8.5302 9.2526 9 1.3048 0.7664 10.1591 0.0984 0.1284 10 1.3439 0.7441 11.4639 0.0872 0.1172 11 1.3842 0.7224 12.8078 0.0781 0.1081 12 1.4258 0.7014 14.1920 9.9540 0.0705 0.1005 13 1.4685 0.6810 15.6178 17.0863 10.6350 0.0640 0.0585 0.0538 0.0940 14 1.5126 0.6611 11.2961 0.0885 0.0838 15 1.5580 0.6419 18.5989 11.9379 16 1.6047 0.6232 20.1569 12.5611 0.0496 0.0460…
Ordinary annuity payment. Fill in the missing annuity in the following table for an ordinary annuity stream: Number of Payments or Years 6 21 33 15 Annual Interest Rate 9% 4% 6% 10% Future Value $0.00 $24,000.00 $0.00 $98,433.34 Annuity (Round to the nearest cent.) $ (Round to the nearest cent.) $(Round to the nearest cent.) (Round to the nearest cent.) Present Value $24,000.00 $0.00 $150,000.00 $0.00