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Chapter 4: Q11BP-b. (page 282)
If you invest $8,500 per period for the following number of periods, how much would you have? b. 50 years at 9 percent.
The investor would have $6,928,210.23 after 50 years.
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b. Would the present value of the funds in part a be enough to buy a $2,900 concert ticket?
What factors might influence a firm’s price-earnings ratio?
Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract for $35,000 per year for the next 10 years. a. If Mr. Moore’s opportunity cost (potential return) is 10 percent, what is the present value of his consulting contract? b. Assuming Mr. Moore will not retire for two more years and will not start to receive his 10 payments until the end of the third year, what would be the value of his deferred annuity?
Question: Betty Bronson has just retired after 25 years with the electric company. Her total pension funds have an accumulated value of $180,000, and her life expectancy is 15 more years. Her pension fund manager assumes he can earn a 9 percent return on her assets. What will be her yearly annuity for the next 15 years?
Why might investors demand a lower rate of return for an investment in Microsoft as compared to United Airlines?
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