After placing $8,000 in a savings account paying annual compound interest of 8%, calculate the amount that will accumulate if it is left for 8 years?

  1. After placing $8,000 in a savings account paying annual compound interest of 8%, calculate the amount that will accumulate if it is left for 8 years?
  2. You have just introduced “must have” headphones for the iPod. Sales of the product are expected to be 20,000 units this year and are expected to increase by 16% annually in the future. What are the expected sales in each of the next three years? If the 20,000 units were expected to increase by 18% a year, what are the expected sales next year for this product?
  3. What is the present value of a perpetual stream of cash flow that pays $80,000 at the end of one year and grows at a rate of 5% indefinitely? The rate of interest used to discount the cash flows is 10%. What is the present value of the growing perpetuity
  4. What is the present value of a $650 perpetuity discounted back to the present at 10%? What is the present value of the perpetuity?
  5. You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:end of year                 A                       B                            C                                                                                                                                      $ 1,000              $ 1,000                     5,000                                                                                                                                  2,000                 1,000                     5,000
  6.   W                               3,000                  1,000                    (5,000)
  7.                                    (4,000)                  1,000                   (5,000)                                                                                                                               4,000                   3,000                   15,000
  8. What is the present value of investments A, B, and C if the appropriate discount rate is 10%?
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