Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. use liabilities (time value of money) and the pres

Use liabilities (time value of money) and the present value tables to answer the following...

80.2K

Verified Solution

Question

Accounting

Use liabilities (time value of money) and the present value tables to answer the following questions:

  1. You just won the lotto and you have been given the option of receiving $4 million today or $1 million at the end of every year for the next five years. Assume that you can invest at 8% per year. Show calculations.
  2. You just won the lotto and you have been given the option of receiving $10 million today or $1 million at the end of every year for the next 4 years and an additional bonus payment of $10 million at the end of the fourth year. Assume that you can invest at 9% per year. Show calculations.
  3. What will be the periodic payment every six months on a bond with $1,000 face value and coupon rate of 8%? The bond promises semi-annual payments.
  4. On January 1, 2011, ABC issues 8%, 2-year bonds with a face value of $100,000. Coupons are payable semi-annually on June 30 and December 31, and the bond will be repaid on December 31, 2012. The market rate of interest on the date of issue is 12%, compounded semi-annually. What is the issue price of the bonds on January 1, 2011? Show calculations.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students