You are told that if you invest $11,100 per year for 19 years (all payments made at the beginning of each year) you will have accumulated $375,000 at the end of the period. What annual rate of return is the investment offering

You are told that if you invest $11,100 per year for 19 years (all payments made at the beginning of each year) you will have accumulated $375,000 at the end of the period. What annual rate of return is the investment offering

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13EB: Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for...

See similar textbooks

Related questions

Q: You are scheduled to receive $44,000 in two years. When you receive it, you will invest it for 7…

A: Computation:

Q: You plan to invest $50,000 today at an annual interest rate of 12% over 5 years. What the future…

A: Following details are given in the question: Present value (Investment today) = $50000 time period =…

Q: How much should an investor pay today for a real estate investment thatwill return $20,000 at the…

A: Formula:

Q: You deposit $19,000 today in an investment account and the annual rate of return is 12%, what will…

A: Formulas: Future value = Present value *(1+rate)^years

Q: An investor has purchased an investment which offers him 30 annual payments of dollar 1,200 per…

A: To find the present value of the investment, we will first define where the payments are made. We…

Q: An investment will return $125 at the end of each month for 5 years and then $250 at the end of each…

A: Value at the end of 5 years of $250 received for next 3 years every month, can be calculated as…

Q: You can invest $ 35,000 today. This investment offers you a fixed annual return, computed monthly…

A: Perpetuity is the series of payments at fixed intervals for an infinite time period. The amount of…

Q: If you invest $15,000 in a long-term venture, you will receive $1,100 per year forever. The first…

A: Initial cost (I) = $15000 CF1 = $1100 forever starting after 2 years CF2 = $500 forever every 6…

Q: How long must one wait (to the nearest year) for an initial investment of $1,000 to triple in value…

A: Individuals and corporations may have excess cash or money left with them in a particular financial…

Q: You require an annual return on your financial investments of 8% per annum. What would you be…

A: Semi annual payment (P) = £1,000 Annual interest rate = 8% Semi annual rate (r) = 8%/2 = 4% Period =…

Q: If you invest $15,000 every year and expect to increase your investment by 6% each year for the next…

A: Annual investment (A) = $15000 Growth rate (g) = 6% r = 7% n = 20 years

Q: You buy a new piece of equipment for $16,230, and you receive a cash inflow of $2,500 per year for…

A: The internal rate of return (IRR) is the interest rate received for investment with payments and…

Q: An investor has the possibility of a programmed investment that yields an effective interest rate of…

A: The future value of an annuity can be calculated using the FV Function.

Q: You expect to receive $30,000 at graduation in two years. You plan on investing it at 9 percent…

A: We have to calculate period required and add two years to that .

Q: How much will I have 8 years from now, if I will invest $10398 at the end of each three months for…

A: The future value of the annuity is the total value of all the payments which is occurred regularly…

Q: What is the present value of your end-of-year investment of $1,000 per year, with the first cash…

A: According to the time value concept, the purchasing power of a sum of money today is more than the…

Q: If Quail Company invests $50,000 today, it can expect to receive $10,000 at the end of each year for…

A: Net Present Value = Present value of cash inflows + Present value of salvage value - Initial…

Q: An individual expects his return on an investment to be $10,000 the first year and to increase…

A: Therefore, the present worth is $57,595.10.

Q: If you make an investment of $5000 and the investment earns a continuous annual interest rate of…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: %.

A: Present Value = First cashflow + Cash flow * PVAF(r, n) = First cashflow +…

Q: A person wants to make two individual investments, one today and one in six months at a rate of 18%…

A: monthly rate = 18%/12 = 1.5% X * 1.01512 + 5,000,000*1.0156 = 10,000,000 X = 3,791,163.26

Q: Suppose you have the opportunity to make an investment in a real estate venture that expects to pay…

A: The concept that helps to evaluate the future or present value of the cash flow is term as the time…

Q: What annual rate of return is earned on a $1,000 investment when it grows to $2,700 in eight years?

A: Future value is the value of assets at a future date given a growth rate. This is used for financial…

Q: An investor has an opportunity to invest in a rental property that willprovide net cash returns of…

A: Calculation of the present value of the cash return is shown below:

Q: i) To what sum will the investment grow at the end of 5 years? i) How much interest will be earned…

A: Given information is: A local University is planning to invest $500,000 every 3 months in an…

Q: At the end of each year for the next 18 years you will receive cash flow of $3700 the initial…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: An investment promises to pay you $80 per year for twenty years and, in addition, at the end of the…

A: The problem is to find the price that will be willing to be paid today for cashflows to be generated…

Q: An investment will pay you $10,000 in 10 years, and it also will pay you $400 at the end of each of…

A: The amount to be paid for the investment is calculated as the present value of annuity plus the…

Q: An investment promises to pay $6,000 at the end of each year for the next three years and $4,000 at…

A: Question 1 is the case of ordinary annuity while question 2 is the case of an annuity due as the…

Q: You are considering an investment that will pay you $1,200 per month for three years. The first…

A: An annuity is a series of equal payments occurring at regular intervals. The present value is…

Q: an investment offers 3850 per year for 15 years, with the first payment occurring one year from now.…

A: Here, Annuity Amount is 3850 Interest Rate is 6%

Q: An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300…

A: Time value The amount of money received today has more value than that of receiving the same amount…

Q: You are looking at an investment that will make annual payments of $28,000, $32,000, $66,000, and…

A: Cahs flow 1 28000 Cash flow 2 32000 Cash flow 3 66000 Cash flow 4 99000 Discount rate…

Q: If you invest $2,000 per year for 9 years and earn a 5% return on your investment during that…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: You have invested 7 million dollars for a horizon of 24 months. You will be paid interest at 7.80%…

A: Initial investment (I) = 7 million Semiannual interest rate (r) = 0.039 (i.e. 0.078 / 2) Semiannual…

Q: You plan to invest $200,000 today at an annual interest rate of 12% over 10 years. What will be the…

A: Following details are given in the question: Present value (Investment today) = $200000 time period…

Q: Tanya is considering an investment that will require an initial payment of 400,000 and additional…

A: Net present value is a discounted cash flow (DCF) method used for evaluating investment proposals.…

Q: You wish to make an investment of $10,000 at 5% interest. How much will your Investment be worth in…

A: Present Value= $10,000 Interest rate= 5% Time period= 20 years

Q: Suppose you are planning for retirement. At thebeginning of this year and each of the next 39…

A: Retirement fund is used for saving some portion of income by people for their retirement. It is also…

Q: A. A person wants to generate fourintallments of $1,000 in the following four years. How much money…

A: Discounting the future cashflows provides the present value.

Q: If you invest $9500 per period for the following number of periods, how much would you have in each…

A: Calculation of Future value of annuity: Answer: Future value annuities are $232,965.77 and…

Q: Keith Riggins expects an investment of $82,014 to return $10,000 annually for several years. If…

A: Formula: P= C×Annuity Factor where, P is present value of an annuity C is future cash flow

Q: A pension fund is making an investment of $100,000 today and expects to receive $1,600 at the end of…

A: The internal rate of return is the rate at which the present value of cash inflows is equals to the…

Question

You are told that if you invest $11,100 per year for 19 years (all payments made at the beginning of
each year) you will have accumulated $375,000 at the end of the period. What annual rate of return is the
investment offering

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one year and the rate is 10%?
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
You are told that if you invest $11,600 per year for 18 years (all payments made at the beginning of each year) you will have accumulated $375,000 at the end of the period. What annual rate of return is the investment offering?
Suppose you invest $385 at the end of each of the next eight years. (a) If your opportunity cost rate is 7 % compounded annually, how much will your investment be worth after the last $385 payment is made? (b) What will be the ending amount if the payments are made at the beginning of each year?
An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of year 4, $300 at the end of year 5, and $500 at the end of year 6. If the rate of interest earned on the investment is 8%, what is the present value of this investment? What is its future value? How do you solve this with excel?
An investment opportunity requires a payment of $750 for 12 years, starting a year from today. If your required rate of return is 8 percent, what is the value of the investment to you today?
You are told that if you invest $10,900 per year for 12 years (all payments made at the end of each year) you will have accumulated $670,000 at the end of the period. What annual rate of return is the investment offering? 29.99% 23.63% 20.63% 26.99% 33.44%
Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?
nAn investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If the interest rate earned on the investment is 8 percent, what is its present value? What is its future value?
you recently paid $13,275 for an investment that promises to pay $625 at the end of each 6 years, then an additonal lump sum payment of $17,500 at the end of the 6th year. what is the expected rate of return on this investment?
Assume you currently have $220,000 that you are ready to invest for retirement. In addition, you plan to save $6,000 per year at the end of each year for years 1-10 $25,000 at the end of year 11 $9,000 per year at the end of each year for years 12-20 Assuming you earn 9.1% as an annual rate of return, how much will you have 20 years from today when you retire?