Question
16. (3 points) On 12-31-19, Acme entered into an agreement that required Acme to pay someone $500,000 on 12-31-31. Assume the appropriate market rate of
16. (3 points) On 12-31-19, Acme entered into an agreement that required Acme to pay someone $500,000 on 12-31-31. Assume the appropriate market rate of interest for Acme was 8%.
As of 12-31-19, what was the present value of Acmes obligation?
As of 12-31-24, what was the present value of Acmes obligation?
As of 12-31-30, what was the present value of Acmes obligation?
17. (2 point) On 12-31-16, Austin entered into an agreement that required Austin to pay a supplier $1,000 every year on 12-31 until 2026. The agreement required Austin to make the first annual payment on 12-31-16. Assume the market rate of interest for Austin is 6%. As of 12-31-16 what was the present value of Austins obligation?
18. (3 point) On 12-31-19, Austin entered into an agreement that required Austin to pay a vendor $50 every year on 12-31 until 2064. The agreement required Austin to make the first annual payment on 12-31-20. Assume the market rate of interest for Austin is 3%. As of 12-31-19 what was the present value of Austins obligation?
19. (2 points) On 12-31-15, Austin entered into an agreement that required Austin to pay a supplier $100 every year on 12-31 until 2026. The agreement required Austin to make the first annual payment on 12-31-19. Assume the market rate of interest for Austin is 4%. As of 12-31-15 what was the present value of Austins obligation?
20. (6 points) On 12-31-14 J entered into an agreement allowing J to collect the following:
Starting 12-31-15, $200 every 12-31 until 2024.
On 12-31-25, a one-time collection of $1,500.
Nothing in 2026.
Starting 12-31-27, $500 every 12-31 until 12-31-31.
How much total cash will J eventually collect?
Assume a market interest rate of 10%. As of 12-31-14, what was the present value of Js receivable?
16. (3 points) On 12-31-19, Acme entered into an agreement that required Acme to pay someone $500,000 on 12-31-31. Assume the appropriate market rate of interest for Acme was 8%.
As of 12-31-19, what was the present value of Acmes obligation?
As of 12-31-24, what was the present value of Acmes obligation?
As of 12-31-30, what was the present value of Acmes obligation?
17. (2 point) On 12-31-16, Austin entered into an agreement that required Austin to pay a supplier $1,000 every year on 12-31 until 2026. The agreement required Austin to make the first annual payment on 12-31-16. Assume the market rate of interest for Austin is 6%. As of 12-31-16 what was the present value of Austins obligation?
18. (3 point) On 12-31-19, Austin entered into an agreement that required Austin to pay a vendor $50 every year on 12-31 until 2064. The agreement required Austin to make the first annual payment on 12-31-20. Assume the market rate of interest for Austin is 3%. As of 12-31-19 what was the present value of Austins obligation?
19. (2 points) On 12-31-15, Austin entered into an agreement that required Austin to pay a supplier $100 every year on 12-31 until 2026. The agreement required Austin to make the first annual payment on 12-31-19. Assume the market rate of interest for Austin is 4%. As of 12-31-15 what was the present value of Austins obligation?
20. (6 points) On 12-31-14 J entered into an agreement allowing J to collect the following:
Starting 12-31-15, $200 every 12-31 until 2024.
On 12-31-25, a one-time collection of $1,500.
Nothing in 2026.
Starting 12-31-27, $500 every 12-31 until 12-31-31.
How much total cash will J eventually collect?
Assume a market interest rate of 10%. As of 12-31-14, what was the present value of Js receivable?
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