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QUESTION
PLEASE ANSWER ASAP! Cynthia Baker has just won the lottery and has been promised an annual payment of $15,000 every year forever starting one year...
PLEASE ANSWER ASAP!!
- 1. Cynthia Baker has just won the lottery and has been promised an annual payment of $15,000 every year forever starting one year from today. If the annual interest rate is 11%, what is the present value of the winnings?
- 2. Suppose you will be investing $18,000 at the end of each year for the next 25 years for your retirement. At the end of this 25 year time period you hope to have accumulated $1.2 million. What annual rate of return would you have to earn on your investments to reach your target? (Round your answer to the nearest whole number percentage)
- 3. John Peck plans to buy a lawn tractor for $2,600 after two years. If the annual interest rate he could earn 9.0% compounded every six months, how much money should he set aside today for the purchase?
- 4. Suppose you bought a new car with a 6 year loan that requires monthly payments. The amount borrowed is $28,500. The monthly payment is $452.18. What is the annual percentage interest rate (APR) on this loan?
- 5. Fang Corp has been told by its investment bankers that it would have to pay 11% interest to successfully sell new bonds. The company has bonds outstanding, issued 5 years ago, on which the company is paying 8% annual interest. The company's tax rate is 42%. What is its after-tax cost of debt if it decides to borrow new funds?
