1. Happy Harry has just bought a scratch lottery ticket and won €10,000. He wants to finance the future study of his new
Posted: Sun Jul 03, 2022 1:07 pm
1. Happy Harry has just bought a scratch lottery ticket and won€10,000. He wants to finance the future study of his newly borndaughter and invests this money in a fund with a maturity of 18years offering a promising yearly return of 6%. What is the amountavailable on the 18th birthday of his daughter?
2. Rudy will retire in 20 years. This year he wants to fundan amount of €15,000 to become available in 20 years. How much doeshe have to deposit into a pension plan earning 7% annually?
3.The National Savings Fund promises a monthly 0.75% return ifyou deposit €100 per month for 15 consecutive years. What amountwill be accumulated after those 15 years?
4. Willy has just bought a house. She estimates that the roofwill have to be renewed at a cost of €25,000 after 20 years. Tocover these costs, she intends to save an equal amount of money atthe end of each year, earning 6% annual interest rate. How much issuch a yearly annuity?
5. Pete considers buying a house. Currently, he rents aplace for €1,000 a month. The current monthly interest rate onmortgages is 0.5%. His planning period is 20 years. If he doesn’twant to increase his housing costs, what amount of mortgage isavailable for his purchase? (Neglect any tax effects here).
6. Liphips Ltd has just paid a dividend per share of €1.20.Shares are valued only on the basis of expected dividends. Anannual sustainable growth of dividends of 4% is assumed. Theappropriate discount rate (i) is 10% per year. The planning horizonis limited to 20 years. Compute the share value.
7. Centuries ago, rich families in the province ofFriesland established a fund to further welfare and education. Fromthis fund, only the interest revenue was allowed to be spent, inorder to keep the principal unattached. Assume the fund hasamounted to €12 million and market interest rate (i) is 6%annually. What would be the perpetuity (or present value of thefund) endowed to the society?
8. A company buys a piece of equipment for €2 million onJanuary 1. The expected useful life is 6 years and the salvagevalue is estimated zero. The company intends to replace theequipment identically. The average expected price increase is 8%yearly. For this purpose, the company creates a special fund withannual equal payments at the end of each year during the lifetime.Cost of capital and earnings of the fund (i) is 10% per year.Compute the annual payment into the fund.
2. Rudy will retire in 20 years. This year he wants to fundan amount of €15,000 to become available in 20 years. How much doeshe have to deposit into a pension plan earning 7% annually?
3.The National Savings Fund promises a monthly 0.75% return ifyou deposit €100 per month for 15 consecutive years. What amountwill be accumulated after those 15 years?
4. Willy has just bought a house. She estimates that the roofwill have to be renewed at a cost of €25,000 after 20 years. Tocover these costs, she intends to save an equal amount of money atthe end of each year, earning 6% annual interest rate. How much issuch a yearly annuity?
5. Pete considers buying a house. Currently, he rents aplace for €1,000 a month. The current monthly interest rate onmortgages is 0.5%. His planning period is 20 years. If he doesn’twant to increase his housing costs, what amount of mortgage isavailable for his purchase? (Neglect any tax effects here).
6. Liphips Ltd has just paid a dividend per share of €1.20.Shares are valued only on the basis of expected dividends. Anannual sustainable growth of dividends of 4% is assumed. Theappropriate discount rate (i) is 10% per year. The planning horizonis limited to 20 years. Compute the share value.
7. Centuries ago, rich families in the province ofFriesland established a fund to further welfare and education. Fromthis fund, only the interest revenue was allowed to be spent, inorder to keep the principal unattached. Assume the fund hasamounted to €12 million and market interest rate (i) is 6%annually. What would be the perpetuity (or present value of thefund) endowed to the society?
8. A company buys a piece of equipment for €2 million onJanuary 1. The expected useful life is 6 years and the salvagevalue is estimated zero. The company intends to replace theequipment identically. The average expected price increase is 8%yearly. For this purpose, the company creates a special fund withannual equal payments at the end of each year during the lifetime.Cost of capital and earnings of the fund (i) is 10% per year.Compute the annual payment into the fund.