23. Find the future value of an ordinary annuity for P500,000 investment at 5% quarterly for 10 years. a. P5,436,194.64 b. P6,436,194.64 c. P2,820,372.22 P3,820,372.22 d. 24. Suppose you invested P1000 per quarter over a 15-year period. If money earns an annual rate of 6.5% compounded quarterly, how much would be available at the end of the time period. a. P100,400.65 c. P100,336.68 b. P40,336.68 d. P50,336.68 25. A bank loans a family P90,000 at 4.5% annual interest rate to purchase a house. The family agrees to pay the loan off by making monthly payments over a 15-year period. How much should the monthly payment be in order to pay off the debt in 15 years? a. P689.49 C. P688.49 d. P690 b. P678.49 26. A 5-year ordinary annuity has a present value of $1,000. If the interest rate is 8 percent, the amount of each annuity payment is closest to which of the following? a. P250.44 c. P181.62 d. P184.08 b. P231.91 27. An 8-year annuity due has a future value of $1,000. If the interest rate is 5 percent, the amount of each annuity payment is closest to which of the following? c. P154.73 a. P109.39

23. Find the future value of an ordinary annuity for P500,000 investment at 5% quarterly for 10 years. a. P5,436,194.64 b. P6,436,194.64 c. P2,820,372.22 P3,820,372.22 d. 24. Suppose you invested P1000 per quarter over a 15-year period. If money earns an annual rate of 6.5% compounded quarterly, how much would be available at the end of the time period. a. P100,400.65 c. P100,336.68 b. P40,336.68 d. P50,336.68 25. A bank loans a family P90,000 at 4.5% annual interest rate to purchase a house. The family agrees to pay the loan off by making monthly payments over a 15-year period. How much should the monthly payment be in order to pay off the debt in 15 years? a. P689.49 C. P688.49 d. P690 b. P678.49 26. A 5-year ordinary annuity has a present value of $1,000. If the interest rate is 8 percent, the amount of each annuity payment is closest to which of the following? a. P250.44 c. P181.62 d. P184.08 b. P231.91 27. An 8-year annuity due has a future value of $1,000. If the interest rate is 5 percent, the amount of each annuity payment is closest to which of the following? c. P154.73 a. P109.39

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Calculate the present values at t = 0 (now) of the following cash flows: j. The first cash flow at t = 1 is $100. Every year thereafter, the payment increases by 3% over the previous year’s payment. This continues for 9 years past the first payment (for a total of 10 payments). What is the present value of this growing annuity if the effective annual discount rate is .02 (2%)? k. $50 every year and a half forever, with the first payment after 1.5 years, where the effective annual rate is .05 (i.e., 5%).
2. Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semiannually. If you make 20 consecutive semiannual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? $57,900.83 $58,988.19 O $52,821.19 O $64,131.50 O $62,527.47
2. RM 50 is deposited every month for 2 years at 12% compounded monthly. What is the future value of this annuity? How much interest is earned?No use excel (RM1348.67, RM148.67)
An annuity pays $54 per year for 28 years. What is the future value (FV) of this annuity at the end of those 28 years, given that the discount rate is 8%? A. $5,148.30 B. $7,207.62 C. $6,177.96 D. $3,088.98
an investment is expeted to result in equal payments of $9740.00 at the end of each month for the next 7 years (ordinary annuity). Compounding: 12 times per year If the appropriate required rate of return (discount rate) is 4% what is the present value of the annuity stream?
Problem #4: A perpetuity pays $3400 at the end of every month for 11 months of each year. At the end of the 12th month of each year, it pays double that amount. If the effective ANNUAL rate is 10.7%, what is the present value of this perpetual annuity?
8. A particular investment promises to make year-end annual payments in perpetuity. The first four annual payments will be $5. After that, future annual payments will grow at 5% per year forever. What is the present value of this investment if the discount rate is 10%? a. $98.68 b. $87.57 c. $76.46 d. $65.35 e. $54.24
What is the present value of an ordinary annuity that pays $1,000 per year for 4 years, assuming the annual discount rate is 7 percent? a. $3,051.58 b. $762.90 c. $3,624.32 d. $3,738.32 e. $3,387.21
i. Find the annual payments for an ordinary annuity and an annuity due for 12 years with a PV of $1,000 and an interest rate of 10%. Round your answers to the nearest cent. Annual payment for ordinary annuity: $ Annual payment for annuity due: $ j. Find the PV and the FV of an investment that makes the following end-of-year payments. The interest rate is 10%. Year 1 Payment $100 2 $300 $500 3 Round your answers to the nearest cent. PV of investment: $ FV of investment: $ k. Five banks offer nominal rates of 9% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $3,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places. EAR FV after 1 year FV after 2 years Nominal rate $ $ Payment A A % B $ $ % B B C % $ 2. If the TVM is the only consideration, what nominal…
Suppose payments will be made for 7 1/4 years at the end of each month from an ordinary annuity earning interest at the rate of 3.25%/year compounded monthly. If the present value of the annuity is $41,000, what should be the size of each payment from the annuity? (Round your answer to the nearest cent.)$
Suppose you are going to invest $11,000 per year for six years. The appropriate interest rate is 9 percent. What is the future value if the payments are made on the last day of the year? What if the payments are made on the first day of the year? a) $82,756.68; $90,204.78 b) $90,204.78; $82,756.68 c) $49,345.10; $53,786.16 d) $53,786.16; $49,345.10

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