Financial forcasting

A deferred annuity will pay you $500 at the end of each year for 10 years, however the ?rst payment will not be made until three years from today (payments will be made at the end of years 3 through 12)

What amount will you have to deposit today to fund this deferred annuity? Use an 8% discount rate and round your answer to the nearest $100

Wags Dog Emporium is considering a project that requires an initial investment of $280,000 Wags maintains a debt-equity ratio of 055, has a flotation cost of debt of 75 percent and a flotation cost of equity of 105 percent The firm has sufficient internally generated equity to cover the equity portion of this project and will not issue additional equity

What is the initial cost of the project including the flotation costs?

Solution:

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