Intermediate Corporate Finance 3023Homework 21)
What is the value of receiving $5,000/year forever starting in one year if thediscount rate is 6%? What if the cash flows start today? What if the cash flowsstart in 13 years?2)
If you put $100,000 in to a bank account earning 4% interest, how much will youhave in 5 years if the 4% is an annually compounded APR? What if it is a semi-annually compounded APR? What if it is a monthly compounded APR? What if it is a continuously compounded APR?3)
What is the value of receiving $4,000 per month forever, the first cash flowstarting in one month, if the discount rate is a 4% monthly compounded APR?What if the discount rate is an annually compounded 4%?4)
What is the value of receiving $5,000 per year starting in one year for 10 yearsassuming a 4% interest rate? What if the $5,000 per year cash flows start in 7years and continue for 12 years?5)
You take out a 30-year $200,000 mortgage loan with an APR (monthly) of 4.5%and monthly payments. In 12 years you decide to sell your house and pay off themortgage. What is the principal balance on the loan?6)
a) You plan on retiring in 35 years and want to accumulate enough by then tospend $50,000 per year for 20 years. If the interest rate is 5%, how much mustyou accumulate by the time you retire?b) How much must you save each year until retirement in order to finance yourretirement consumption?