A local bank advertises the following deal: "Pay us $100 at the end of each year for 12years and then we will pay you (or your beneficiaries) $100 at the end of each yearforever." Calculate the present value of your payments to the bank if the interest rate is4.75%. Note: Do not round intermediate c What is the present value of a $100perpetuity deferred for 12 years if the interest rate is 4.75% ? is this a good deal?

A deferred perpetuity involves a stream of regular payments that starts at a certain point in the…

Answered: A local bank advertises the following…

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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Similar questions

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An accounting firm agrees to purchase a computer for $180,000 (cash on delivery) and the delivery date is in 270 days. How much do the owners need to deposit in an account paying 0.85% compounded quarterly so that they will have $180,000 in 270 days? (a) State the type. sinking fund amortization present value future value ordinary annuity (b) Answer the question. (Round your answer to the nearest cent.) $
The problem describes a debt to be amortized. (Round your answers to the nearest cent.)A man buys a house for $330,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 9 years. The interest rate on the debt is 10%, compounded semiannually. (a) Find the size of each payment.$ (b) Find the total amount paid for the purchase.$ (c) Find the total interest paid over the life of the loan.$
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Provide manual solutions to below mentioned problems. An engineer is entitled to receive P25,000 at the beginning of each year for 18 years. If the rate of interest is 4% compounded annually. 1. What is the present value of this annuity at the time he is supposed to receive the first payment?2. What is the sum of this annuity at the end of the 18th year?3. Find the difference between the sum of this annuity which is paid at the beginning of each year and an annuity paid at the end of each year. Answer. 1. P329,141.72 2. P666,780.73 3. P25,645.41
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An accounting firm agrees to purchase a computer for $130,000 (cash on delivery) and the delivery date is in 270 days. How much do the owners need to deposit in an account paying 0.55%compounded quarterly so that they will have $130,000 in 270 days? (a) State the type. sinking fundamortization ordinary annuitypresent valuefuture value (b) Answer the question. (Round your answer to the nearest cent.)

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