A perpetuity-due with annual payments consists of 10 level payments of X followed by a series of increasing payments. Beginning with the 11th payment, each payment is 1.5% larger than the preceding payment. Using an annual effective interest rate of 5%, the present value of the perpetuity is $45,000. Calculate X. a.) 1679 b.) 1737 c.) 1763 d.) 1781

A perpetuity-due with annual payments consists of 10 level payments of X followed by a series of increasing payments. Beginning with the 11th payment, each payment is 1.5% larger than the preceding payment. Using an annual effective interest rate of 5%, the present value of the perpetuity is $45,000. Calculate X. a.) 1679 b.) 1737 c.) 1763 d.) 1781

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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How much more is a perpetuity of $6,000 worth than an annuity of the same amount for 10 years? Assume an interest rate of 9% and cash flows at the end of each year. a. $99,212 b. $34,740 c. $58,097 d. $28,161
K Calculate the total interest and principal portions for the series of monthly payments of $166.95 that occur during year 7, for an ordinary annuity of $13,500 with 8.5% interest compounded quarterly for 10 years. Round your answers to two decimal places. Principal Number Interest Number
A perpetuity makes its first annual payment of $110 exactly 17 years from today. The discount rate is 6.1% per annum compounded annually. 1) What is the present value of this perpetuity valued at exactly Year 13? (Round your answer to the nearest cent) 2) What is the present value of this perpetuity valued at exactly Year 0? (Round your answer to the nearest cent)
K (Compound annuity) What is the accumulated sum of each of the following streams of payments? a. $500 a year for 8 years compounded annually at 10 percent. b. $104 a year for 7 years compounded annually at 9 percent. c. $32 a year for 12 years compounded annually at 11percent. d. $21 a year for 6 years compounded annually at 6 percent.
What is the future value of an ordinary annuity with annual payments of $1200 for 20 years at 10% p.a. compounded annually? Select one: a. $68,729.99 b. $48,964.86 c. $68,112.18 d. $68,279.99
.
Present Value of an Annuity Determine the present value of $310,000 to be received at the end of each of four years, using an interest rate of 6%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year $fill in the blank 1 Second Year fill in the blank 2 Third Year fill in the blank 3 Fourth Year fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.$fill in the blank 6 c. Why is the present value of the four $310,000 cash receipts less than the $1,240,000 to be received in the future?The present value is less due to..........................over the 4 years.
From Ordinary Annuities; Calculate parts A, B & C assuming they are Annuities Due. A.$600 per year for 12 years at 8% B.$300 per year for 6 years at 4% C.$500 per year for 6 years at 0%
Annuity A has 20 years annual payments as follows:- i) ii) iii) Annuity i) ii) iii) The first payment is 1000 made at the end of the first year. The subsequent payments increase by 3% from the previous years. The effective interest rate is 5% per annum. B has 20 years annual payments as follows:- The first payment is X made at the end of the first year. The subsequent payments increase by X from the previous years. The effective interest rate is 6% per annum. Annuity C is an annuity immediate of 20-year annual level payments with effective interest rate of 7% per annum. Evaluate, (a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. stelua. [3 marks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. 13 marks] Preval 13 marks
utv.3
Ques 15 and 16

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