Homework Accounting Questions?

Posted on 2014-04-11 12:27:00 in Accounting by .M.

A woman wants to retire in 8 years. At that point, she wants to purchase an annuity that will pay her $1,000 per year for 8 years. How much must she deposit today to buy the annuity. Assume that the discount rate is 5%



A company is considering a project to save $6 mn per year indefinitely. The project takes a $20mn investment immediately. The cost of capital is 4%. What is the value of this investment? Should the company undertake the investment?



A two stock portfolio has 30% in Stock A, with an expected return of 21% and a standard deviation of 5%. The rest is in Stock B, with an 18% expected return and a standard deviation of 2%. The correlation coefficient is 0.6. What is the standard deviation for the portfolio?

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