A donor wants to fund a growing perpetuity that will pay $14,164 per year to a local museum, starting next year. She wants the annual amount paid to the museum to grow by 5% per year. Given that the interest rate is 9%, how much does she need to fund this perpetuity? Please use EXCEL
Q: Finance A firm's expected free cash flows in year 1, 2, and 3 are $30 million, $35 million,…
A: Horizon Value is also known as terminal value. It can be calculated by following formula:- Terminal…
Q: ARK invest estimates value of each US digital wallet user at $19,900 by 2025. Assume value of…
A: First we will calculate the number of paying clients for the given period as per the data in the…
Q: Generous Dynamics is planning on buying 3000 ounces of gold in six months. The correlation of the…
A: Hedging is used to reduce the risk in the spot market by taking the opposite side positions in the…
Q: Find the interest rates earned on each of the following. Round your answers to the nearest whole…
A: The amount that the lender charges the borrower over and beyond the principle amount is referred to…
Q: QUESTION 3 A firm has sales of $4.5 million, and 12 percent of the sales are for cash. The year-end…
A: Sales = $4.5 million Cash sales rate = 12% Account Receivable = $575,000
Q: you are buying a house and will borrow $225,000 on a 30-year fixed reate mortgage with monthly…
A: Monthly payment refers to an amount that is paid at every month for the repayment of loan amount by…
Q: Give 10 importances of finance research
A: Finance research is the systematic study and analysis of financial concepts, theories, and data to…
Q: Melissa was supposed to pay Erik $4,100, 6 months ago, and $1,760, 5 months from now. If she wants…
A: The PV of an investment refers to the value of the cash flows of the investment at present after…
Q: Joseph's lunch at a restaurant costs $13.00, without tax. He leaves the waiter a tip of 17% of the…
A: costs = $13 Tip rate = 17%
Q: A sailboat costs $22,765. You pay 15% down and amortize the rest with equal monthly payments over a…
A: EMI is also known as monthly payment. It includes the Interest amount & principal amount which…
Q: 2. Compute the overall cost of capital based the following data. Which weight is preferable? Why?…
A: It is a case of finding a cost of capital for the firm where the firm deploys capital from different…
Q: How does the principal-agent problem affect the corporation?
A: The principal-agent problem refers to the conflict of interest that arises between the principal…
Q: Consider the Following 10-year project: Year Cash Flow 0 -30000 1 2500 2 5000 3…
A: Discount rate = r = 12% Cut off Period = 9 years
Q: You are given two options: Option 1: 2,000 dollars cash on January 1st Option 2: 150 dollars on…
A: The concept of TVM refers to the increase in the value of money received earlier because of interest…
Q: Consider two local banks. Bank A has 89 loans outstanding, each for $1.0 million, that it expects…
A: Expected returns are calculated by taking the product of the returns & the probability of their…
Q: Your broker mailed you your year-end statement. You have P250,000 invested in Happy Chemical,…
A: In the given case, we have provided the investment amount of each stock. Summing up each investment…
Q: (a) What is the value of the CD when it matures? $ (b) Three months before the CD was due to mature,…
A: Simple interest is quite simple and there is no interest on interest and used for period less than…
Q: 5. A new company developed a program in which the employees will be allowed to purchase share of…
A: Annual deposit, P = P 8,000 Interest rate, r = 9% Deposit period, n = 5 years Share value = P 100…
Q: third year of operation. The projected revenue for the first year of operation is $500,000, although…
A: With debt proportion (D), equity proportion (E), cost or interest rate of debt (rD) and required…
Q: Suppose a ten-year, $1,000 bond with an 8.4% coupon rate and semiannual coupons is trading for…
A: Bonds refer to the financial instrument issued for providing funds to the borrower by the…
Q: If a business unit generated $3,600,000 in BEFORE TAX PROFIT and had invested capital of $18,000,000…
A: Economic value added = Net operating profits after tax - (invested capital *Wacc) invested capital…
Q: Suppose you deposited $4,000 in a savings account earning 2.1% interest compounding daily. How long…
A: Future value refers to the amount of current assets at some future date affected by interest rates,…
Q: Using this table as needed, calculate the required information for the mortgage. Term of Loan…
A: Monthly payment refers to an amount that is being paid at every period for the repayment of loan…
Q: Why do the bonds have different credit ratings?
A: Bonds have different bond ratings this is because it depends on the creditworthiness of the bond.…
Q: 1. Toiletry Products, Inc. manufactures diapers. As their target customers age and pass on, sales of…
A: Current Dividend (D)=$2.50 Growth rate (g)=4% Required return (ke)=12% Required: Stock Price=?
Q: Suppose you have a student loan of $35,000 with an APR of 6% for 40 years. Complet parts (a) through…
A: A loan is a financial arrangement in which one party, typically a lender or a financial institution,…
Q: Consider a two-factor Arbitrage Pricing Theory (APT) model, r₁ = a₁ + b₁₁ifi + b2,if2 + €₁, with the…
A: The APT theory refers to the relation between the return provided by the asset and the factors that…
Q: owing return data for the market and for each of the investments over the past 10 0-2019 Year 2010…
A: Beta measures the risk of a stock with respect to the overall market. The beta for the overall…
Q: A French company is considering a project in US. The project will cost $100M. The cash flows are…
A: In this question, the home currency is € and the foreign currency is $. We need to convert the cash…
Q: 4.You expect to need $22,500 in 4 years to finance the wedding of your daughter. How much should you…
A: Deposited amount refers to the present value of an asset that will be present at some future date…
Q: 16. What is the total variance of the following portfolio including 2 assets invested in the ratio…
A: Formula to be used: Portfolio variance=(WA2 x σ2A)+(WB2 x σ2B)+ (2 x WA x σA x WB x σB x r) Data…
Q: Mary is to receive an annuity with 30 annual payments. The first payment of $1,000 is due…
A: No. of Payments = 30 Payments (PMT) = 1000 Interest Rate = 12% Growth Rate = -5%
Q: You have been asked by the president of your company to evaluate the proposed acquisition of a new…
A: NPV net present value is the difference between the present value of cash flow and initial…
Q: Suppose you own a mutual fund that has 10,311,515 shares outstanding. If its total assets are…
A: NAV = (Total Assets - Total liabilities) / No of units Total Assets = $36,600,019 Total liabilities…
Q: You have $50,000 in your retirement fund that is earning 5.5 percent per year, compounded quarterly.…
A: Amount present in fund = $50,000 Interest rate = 5.5% compounded quarterly
Q: copy..Alyeska Services Company, a division of a major oil company, provides various services to the…
A: Turnover = Sales/Average operating assets
Q: If you consider a 5 year, 6% coupon bond, making annual coupon payments. If the bond has a yield to…
A: Bond Price The price of the bond represents the value of the bond at present. It is the price that…
Q: $1,200 is received at the beginning of year 1, $2,200 is received at the beginning of year 2, and…
A: Note: All cash flow is at the beginning of the year as given in the question means the notation I am…
Q: If Megan's tuition, fees, and expenditures for books this year total $19,000, what will they be…
A: Please note that under answering guidelines only 1 question can be solved. Since multiple questions…
Q: 1.6 Today you have P to invest in a security that pays an interest rate of r per year and compounds…
A: Since you have posted a question with multiple sub-parts, we will provide the solution only to the…
Q: Using the expectations hypothesis theory for the term structure of interest rates, determine the…
A: The expectations theory refers to the relation between the forward rates and the spot rates of the…
Q: finance Micah is going to buy a rental house to begin building his real estate wealth. He is not…
A: Net present value is the modern method of capital budgeting is used to determine the present worth…
Q: m 0 1 2 32 50 6 B 100 119.2 142.09 169.37 201.89 240.65 286.85 Joelle prefers to pay by credit card,…
A: A credit card is a payment card that allows the cardholder to make purchases and borrow funds from a…
Q: Calculate the equivalent annual costs for selling the new machine and for selling the old machine…
A: We first need to determine the NPV of costs of each of the mill. EAC is the NPV of the project…
Q: The standard factor equation that would answer the question
A: Future value With interest or discount rate (r), period (n) and present value, the future value is…
Q: Your stockbroker, John Smith, calls you with a hot stock tip to buy SMITH Inc. The stock is…
A: The dividend discount model (DDM), a mathematical technique for predicting the price of a company's…
Q: WellyWeta workshop is considering buying a machine that costs $545,000. The machine will be…
A: To determine the which option we should choose, we first need to determine the NPV of owning and…
Q: hat are two motivations to sell an asset, even if the current value is less than what you paid for…
A: The Asset help to create product and sale in the market and these assets can be either in terms of…
Q: The graph ilustrates the market for Internet service. The government has imposed a per unit tax on…
A: The difference between the two lines supply lines, red curve and blue curve (upward sloping) is the…
Q: Bramble Corporation had net credit sales of $14100000 and cost of goods sold of $9370000 for the…
A: Inventory turn over ratio show how much time inventory has been rolled over during the year and it…
f2.
Subject :- Accounting
A donor wants to fund a growing perpetuity that will pay $14,164 per year to a local museum, starting next year. She wants the annual amount paid to the museum to grow by 5% per year. Given that the interest rate is 9%, how much does she need to fund this perpetuity? Please use EXCEL
Step by step
Solved in 3 steps with 2 images
- Assume you are working with the foundation to fund a scholarship in your name. Currently, the foundation can earn a 5 percent return on any donations. A. How much money would you need to donate to fund a scholarship that pays $25,000 every year forever, starting one year from now? B. How much money would you need to donate if the foundation could increase their return to 7 percent on any donations?1. A company wants to give an endowment for a college. They wish to give $10,202.41 in perpetuity. What would be the present value if the interest rate is 8.1%?Camosun College has just received a donation of $50,000. The donor has stipulated that the funds should be used to fund an ongoing annual bursary with the first payment given out in one year. If the money is invested into an account earning 3.71% compounded annually (j1), how much will the annual bursary be? Your Answer:
- Determine the amount of money required to set up a charitable endowment that pays the amount P each year indefinitely for the annual interest rate r compounded continuously. P = $13,000, r = 6% STEP 1: We start with the present value of a perpetuity, which is defined as follows. Present value = P r Here, represents the size of each annual payment in dollars, and represents the annual interest rate. STEP 2: Calculate the present value. (Round your answer to two decimal places.)(b) As an added benefit to staff, Insignia intends to start a Trust Fund to assist the children of its employees with university tuition via scholarships. The intention of the company is to assist 4 different students annually with a $10,000 grant each. The grant is expected to be increased by 5% annually and provide scholarships indefinitely. Required: i. Assuming this fund will earn 10% interest per annum, calculate the value of the fund today. ii. Insignia decides to fund this amount (calculated in (i)) via monthly deposits over the next 12 months in an enhanced savings account, after which the scholarships will begin. Assuming a return of 12%, compounded monthly, how much would Insignia need to deposit monthly over the next year, to achieve this goal? ii. Compute the effective annual rate on this enhanced savings account.5) A rich donor gives a hospital $1,040,000 one year from today. Each year after that, the hospital will receive a payment 6% larger than the previous payment, with the last payment occurring in ten years' time. What is the present value (PV) of this donation, given that the interest rate is 11%?
- 3. A donor wishes to endow a scholarship to a certain university in the name of a certain professor. The scholarship is to provide $50000 per year for the first 8 years and starting 11 years from now $200000 every 3 years (forever). If the university expects to be able to earn a nominal interest of 16% per year compounded continuously on the endowment, how much must the donor give now if the first scholarship is to be given 1 year from now?Hal wants to establish a savings fund from which a community organization could draw $890 a year for 20 years. If the account earns 2.5 percent annual interest, what amount does he have to deposit now to achieve this goal? Use Exhibit 1B-4. (Round time value factors to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Amount to be deposited $Q4. Aloma, a university graduate who started a successful business, wants to start an endowment in her name that will provide scholarships to ME students. She wants the scholarship to provide $11,000 per year and expects the first one to be awarded on the day she fulfills the endowment obligation. If Aloma plans to donate $140,000, what rate of return must the university realize in order to award the annual scholarship forever? The rate of return that the university must realize in order to award the annual scholarship forever is %.
- Don Solomon wants to set up a scholarship program with his alma mater. If P941498 is needed per year for the scholars, how much must he invest today at 1.7% compounded annually to fund the scholarship program in perpetuity? Round your answer to 2 decimal places.Draw the cash-flow diagram if neccesary 4) A P3 million donation was given by a rich man to a foundation that cares for elderly people without shelters. This donation was then invested to a fund that earns an interest rate of 12% effective. The amount in the fund will provides an equal-beginning of a monthly medical expenses of P 37, 500 at the start of investment for the elderly as long as the amount is available. a) How long will it lasts? b) What available amount would be in the fund after the last monthly expense? Pls show the solution. ThanksEmma wants to donate $1,000,000 to establish a fund to provide an annual scholarship in perpetuity. The fund will earn an interest rate of j4=4.12% p.a. effective and the first scholarship will be first awarded 2.5 years after the date of the donation. (a) What is the amount of the annual scholarship (rounded to two decimal places)? (b) Assume that the fund's earnings rate rate has changed from j4=4.12% to j4 = 3.87% one year before the first scholarship payment. How much does Emma need to add to the fund at that time (one year before the first scholarship payment) to ensure that scholarship amount will be unchanged (rounded to two decimal places)? (a) What is the amount of the annual scholarship (rounded to two decimal places)? a. 44494.20 b. 46355.87 C. 41840.92 d. 43772.21 (b) Assume that the fund's earnings rate rate has changed from 4-4.12% to 4-3.87% one year before the first scholarship payment. How much does Emma need to add to the fund at that time (one year before the first…
