Your rich aunt (who really liked you) passes away at the age of 93. Fortunately for you, she leaves you an investment in preferred stock that will pay a $7,000 annual dividend forever, with the first dividend payment occurring one year from today. Since you don’t want to wait for your money, you decide to sell the investment. If the annual interest rate is 5.2%, what is the value today of this investment? a. $134,615.38 b. $70,000.00 c. $7,000.00 d. The value of this investment cannot be calculated with the information provided.
You would like to invest in a bond that pays you an annual interest payment of$400 for 15 years, with the first payment beginning one year from today. In addition, you will also receive a one-time payment of $5,000 when the bond matures, 15 years from today. If you want to earn a 9% return (compounded annually) on your investment, what amount should you pay for this bond?
You receive a job offer that includes the following “signing bonus.” In addition to your regular salary, your potential employer offers to pay you an additional$1,000 at the end of your first year, $2,000 at the end of your second year, and$5,000 per year at the end of your third, fourth, and fifth year. Assume that you plan to stay with this employer for at least five years. If the discount rate is 7.5%,compounded annually, what is the value of this signing bonus?
You borrow $20,000 today at an annual interest rate of 8%. You will repay the loan through three annual payments of $7,760.67, with the first payment to be made one year from today. When you make the SECOND payment, two years from today, what amount of the $7,760.67 payment will represent interest?