FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investment bank is selling a financial asset that begins paying $100 for 10 years, but the payments dont start until 17 years from today.

An investment bank is selling a financial asset that begins paying $100 for 10 years, but the payments dont start until 17 years from today. If the annual interest rate is 9%, what is the value of this asset today?

Please explain. I know the answer is 161.64, but during calculation of PV, n = 16 is used instead of 17, when it says 17 years from today and I do not understand why.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Statement Analysis

Financial Statement Analysis

Authors: Andrew P.C.

1st Edition

1520985002, 978-1520985008

More Books

Students also viewed these Finance questions

Question

★★★★★
A major concern for many health professionals is the belief that marketing "creates" needs. Explain the complexity of this issue.

Answered: 1 week ago

Question

★★★★★
10.16. Using a "trial-and-error" approach, estimate how high the strike price has to be in Problem 10.16 for it to be optimal to exercise the option immediately.

Answered: 1 week ago

Question

★★★★★
During the 1960s and 1970s, some educators suggested that students of color and students living in poverty were culturally disadvantaged. The cultural deficit model implied that students home...

Answered: 1 week ago

Question

★★★★★
Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two-year warranty guaranteeing to repair, free of charge, any defects reported during this time period....

Answered: 1 week ago

Question

★★★★★
James is undergoing an analysis of his tax returns. As he has an extensive business network, he has had to send a significant amount of documents to the IRS. He has also had several conversations...

Answered: 1 week ago

Question

★★★★★
PROBLEM II Budget Office Supply Corporation completed the following stock issuance transactions: Issued 5,000 shares of $4 stated value common stock for Mar. 28 cash of $20 per share Received...

Answered: 1 week ago

Question

★★★★★
state the current situation of Learnenow inc and describe the team's goals and the desired outcome should be?

Answered: 1 week ago

Question

★★★★★
A collector found a bone near a former Mayan territory. After careful research it has been determined that the bone lost about 8% of its Carbon-14. Approximately how old is the bone? Could it have...

Answered: 1 week ago

Question

★★★★★
Sweet Memories Inc (for Q11-13) Sweet Memories Inc is a company that produces Customized Family Portraits. Preparing a Family Portrait involves 3-steps: Collect the Images and Stories, Edit, and...

Answered: 1 week ago

Question

★★★★★
5. An outside manufacturer has offered to produce 86,000 Daks and ship them directly to Andretti's customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would...

Answered: 1 week ago

Question

★★★★★
Howard is in the 33% tax bracket, so his after-tax profit is 67% of his before-tax profit. He invests $10,000 in a certain stock, whose annual return is normally distributed with mean 5% and standard...

Answered: 1 week ago

Question

★★★★★
Control (labelled behaviour in previous work): learners prefer to rely on their own initiative, or on the direction of an instructor. This has implications for the level of control required or...

Answered: 1 week ago

Question

★★★★★
Cognitive: learners are more subjective in the way they make decisions and solve problems based on personal judgements, or base their decision making more on logic and scientific approaches. This...

Answered: 1 week ago

Question

★★★★★
Receptivity: learners are predominantly receptive to practical stimuli or theoretical stimuli for learning depending on their cultural backgrounds and their experiences in national educational...

Answered: 1 week ago

Previous Question Next Question