Suppose that the cleanup hitter for the Atlanta Braves promises to donate $611.00 for every homerun he hits. The donations will be made at the end of each season on November 1st. The next payment will be made exactly one year from today. The hitter will play for 10.00 more seasons and expects to hit 35.00 homeruns per year. If the charity can earn 6.00% for this investment, what is the future value of his contribution?
A lottery winner will receive annual end of year payments of $99,751.00. If the lottery winner invests 22.00% of each payment to a mutual fund that pays 3.00% APR, what is the future value of his account after 19.00 years?
An investor contributes $699.00 per quarter in an account that pays 6.04% APR with quarterly compounding. The first contribution will be made next quarter. What is the future value of this account in 7.00 years?
An investor is considering the following opportunity: He will put capital into a start-up company today. He will not receive any cash flows from the investment until end of the 5th year. At that point, he will receive 10.00 years of $14,000.00 per year. If his discount rate on this investment is 20.00%, what is the value of this opportunity today?
A wealthy parent is trying to fund a trust fund for his oldest son. The parent has set aside $436,100.00 today in an account that pays 6.00% annual interest. His oldest son will begin receiving the trust in 19.00 years, and the trust is set up to pay 18.00 identical annual payments. What will be the yearly withdrawal for the son from the trust?
A successful businessman is selling one of his fast food franchises to a close friend. He is selling the business today for $2,293,600.00. However, his friend is short on capital and would like to delay payment on the business. After negotiation, they agree to delay 4.00 years before the first payment. At that point, the friend will make quarterly payments for 16.00 years. The deal calls for a 5.52% APR "loan" rate with quarterly compounding. What quarterly payment will the friend make on the loan?
A loan shark offers $9,816.00 today in exchange for paying him $1,457.00 per year forever. What is the annual rate of interest on this "loan"?
A company generates $98,206.00 in cash flow per year. If investors want a 10.00% annual return to buy the company, how much are they willing to pay? Let's assume the company will last forever for valuing the opportunity.
An ambitious young graduate wants to purchase a BMW SUV in four years. The cost in four years will likely be $86,480.00. The graduate will try to save the entire price of the car and pay cash to the dealer. To save the money, the young graduate will save $11,421.00 per year. The graduate can earn 6.00% APR on his investments. How much MORE money will the graduate need in four years to buy his dream car?
As an entrepreneur, you approach a venture capitalist seeking cash for funding your business. He does not want any equity in your firm, but instead he wants a yearly royalty forever. He wants a 9.00% royalty on your yearly revenues after the deal. You project to generate annual revenues of $90,000.00. The venture capitalist wants a 30.00% return on all his investments.What is the yearly cash flow from this deal for the venture capitalist?