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4. Assume that Popol promised to pay Php 100,000 per year in perpetuity, how much is the PV of infinite Php 100,000 payments be worth if the interest rate is 10%? 15%? 20%?

4. Assume that Popol promised to pay Php 100,000 per year in perpetuity, how much is the PV of infinite Php 100,000 payments be worth if the interest rate is 10%? 15%? 20%?

Essentials Of Investments
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
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decimal places. Use continuous decimal during computation for uniformity of final answers. 1. Assume that on January 1, 2020 Aldous invested Php 100,000 in a financing company. Aldous would like to find out what would be the worth of his Php 100,000 after 5 years with an interest rate pegged at 8%. 2. Assume that on March 1, 2020 Floryn Company is to make annual investment of Php 200,000 for four years. The interest for this investment was pegged at 9%. The investment is made every year end. What is the future value of this annuity? 3. Pharsa wants to pay equal annual investment amounting to Php 200,000 for 3 years. The prevailing interest rate for this investment is 10%. How much is the discounted value of the three-year payments to be recognized by Pharsa if the first payment will be made at the start of the first year? 4. Assume that Popol promised to pay Php 100,000 per year in perpetuity, how much is the PV of infinite Php 100,000 payments be worth if the interest rate is 10%? 15%? 20%?
Transcribed Image Text:decimal places. Use continuous decimal during computation for uniformity of final answers. 1. Assume that on January 1, 2020 Aldous invested Php 100,000 in a financing company. Aldous would like to find out what would be the worth of his Php 100,000 after 5 years with an interest rate pegged at 8%. 2. Assume that on March 1, 2020 Floryn Company is to make annual investment of Php 200,000 for four years. The interest for this investment was pegged at 9%. The investment is made every year end. What is the future value of this annuity? 3. Pharsa wants to pay equal annual investment amounting to Php 200,000 for 3 years. The prevailing interest rate for this investment is 10%. How much is the discounted value of the three-year payments to be recognized by Pharsa if the first payment will be made at the start of the first year? 4. Assume that Popol promised to pay Php 100,000 per year in perpetuity, how much is the PV of infinite Php 100,000 payments be worth if the interest rate is 10%? 15%? 20%?
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