Blog

Your grandparents would like to establish a trust fund that will pay you and your heirs $190,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 3.7 percent, how much must your grandparents deposit today?

The actual interest rate on a loan that is compounded monthly but expressed as an annual rate is referred to as the _____ rate.

Your credit card charges you .85 percent interest per month. This rate when multiplied by 12 is called the ____ rate.

Billings, Incorporated, has net income of $161,000, a net profit margin of 7.6 percent, and an accounts receivable balance of $127,100. Assume that 66 percent of sales are on credit. What is the days’ sales in receivables?

The Distribution Point plans to save $2,000 a month for the next 3 years for future emergencies. The interest rate is 4.5 percent compounded monthly. The first monthly deposit will be made today. What would today’s deposit amount have to be if the firm opted for one lump sum deposit that would yield the same amount of savings as the monthly deposits after 3 years?

What is the future value of $1,575 deposited at the end of each year for 25 years? Assume an interest rate of 6.3 percent compounded annually.

Theresa adds $1,500 to her savings account on the first day of each year. Marcus adds $1,500 to his savings account on the last day of each year. They both earn 6.5 percent annual interest. What is the difference in their savings account balances at the end of 35 years?

Kindzi Company has preferred stock outstanding that is expected to pay an annual dividend of $4.53 every year in perpetuity. If the required return is 4.44 percent, what is the current stock price?

Stephanie is going to contribute $160 on the first of each month, starting today, to her retirement account. Her employer will provide a match of 50 percent. In other words, her employer will add $80 to the amount Stephanie saves. If both Stephanie and her employer continue to do this and she can earn a monthly interest rate of .45 percent, how much will she have in her retirement account 35 years from now?

A zero coupon bond: