A retirement benefit has monthly payments for 25 years starting one month after retirement. For the first year, the amount of cach monthly payment is 1800. For esch subsequent year, the monthly payments. are 2% more than the monthly payments from the previous year. Using an annual nominal interest rate of 6%, compounded quarterly, find the present value of this benefit.

Q: A company wants to have $50,000 at the beginning of each 6-month period for the next 4.5 years. If…

A: Final amount = $50,000Time = 4.5 years Rate = 6.23% compounded semi-annually

Q: Find the final amount in the following retirement account, in which the rate of return on the…

A: Future value is the estimated value of current assets that is discounted at an assumed rate of…

Q: Find the amount of an annuity that consists of 20 quarterly payments of $700 each into an account…

A: The future value function or concept can be used to determine the future value of a present sum or…

Q: At the end of each month for the next ten years you will receive cash flows of $75.  If the…

A: Present value of annuity = 75{1-(1+0.072)^-120}/0.072

Q: An annuity-immediate has payments of $400, $600, $100 at the end of year for three years. Determine…

A: Convexity means a change in prices due to a change in interest rates. It is used by analysts for…

Q: An annuity due has four payments, $2000 each. What's the present value of the annuity due at a 6%…

A: Annuity due is that annuity in which payments are made at the start of each period. This is in…

Q: Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of…

A: Annuity refers to a stream of constant and usually fixed cash flows. Here the annual amount of $6200…

Q: Find the future value of the annuity due. Payments of $600 per quarter for 6 years at 6% compounded…

A: STEP 1 Annuity Due An approach to determine how much money a series of payments will be worth at…

Q: The present value of an annuity is 16,950. Quarterly payments of 369 are made from 16,950 that is…

A: Present value of annuity (PV) = 16950 Quarterly payment (C) = 369 Annual interest rate = 4%…

Q: The annual discount rate is 7.70%. a. What is the present value of a perpetuity that pays 2,000 at…

A: Perpetuity is a situation where a stream of Cashflow payments continues indefinitely or is an…

Q: A payment of $500 is made at the end of each month for three years to a savings account. The…

A: Present value method is used to evaluate the different level of investment projects. With the help…

Q: Find the present value of a deferred annuity of P760 every six months for 5 years that is deferred 3…

A: When stream of cash flows or annuities are expected to be received or paid over a later date, it is…

Q: Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of…

A: Present Value (PV) is a financial concept used to determine the current worth of a future sum of…

Q: if the money is worth 6% compounded semi-annually, find the present value and the amount of annuity…

A: Annuity refers to series of equalized payments that either made at start or end of specific interval…

Q: The annually compounded discount rate is 7.0%. You are asked to calculate the present value of a…

A: Decisions can take risk and uncertainty into account when using present value. Greater uncertainty…

Q: Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of…

A: Annual interest rate = 12%Period = 5 yearsAnnual amount = $3200To find: PV of annuity when payments…

Q: What is present value of annuity A

A: First payment = $1000Period = 20 yearsIncrement = 3%Interest rate = 5%

Q: The present value of a 10-year annuity immediate is 10,000$. The interest rate is j1=5% for the…

A: The interest rate changes over the lifespan of the annuity. We have the present value. We need the…

Q: A 20-year annuity pays $1,500 monthly, and payments are made at the end of each month. If the…

A: Monthly payments = $1500Period = 20 yearsInterest rate :First 10 years = 6.25%Next 10 years = 5.50%

Q: An insurance policy provides a benefit of $21,500 twenty two years from now. Alternatively, the…

A: Amount to received after 22 years 21,500 Payment per year is $590

Q: Find the present value of deferred annuity of P 900 every 3 months for 5 years that is deferred 3…

A: Deferred annuity is a series of payments which starts after a certain period of time called…

Q: A company wants to have $50,000 at the beginning of each 6-month period for the next 4+1/2 years. If…

A: Final amount = $50,000Time = 4.5 years Rate = 6.23% compounded semi-annually

Q: Find the future value of the annuity due. Payments of $500 per quarter for 3 years at 7% compounded…

A: FV = Future value? C = Quarterly cash flow i.e. $500 r = Quarterly Interest rate i.e. 0.0175 (0.07 /…

Q: Given an effective annual rate of interest of 3%, find the PV of the following 25-year…

A: An annuity payment is a series of cash flows that involve fixed amount payments occurring at equal…

Q: An annuity providing a rate of return of 6.4% compounded monthly was purchased for $61,000. The…

A: An Annuity is a payment made regularly for a fixed period of time at a fixed interest rate. This is…

Q: An annual annuity-immediate pays $2000 at the end of the first year. The last payment is at the end…

A: The present value is the present worth of the amount that will be paid or received at future.

Q: The effective rate of interest is 6% per annum. Calculate the value at the start of the payment…

A: concept. Future cash flows are discounted to present value using discounting  rate of return. this…

Q: A 20-year annuity was purchased with $180,000 that had accumulated in an RRSP. The annuity provides…

A: Time Period = 20 Years Interest rate = 5% Present Value = $180,000

Q: At the end of each month for the next ten years you will receive cash flows of $50.  If the…

A: Annuity refers to the contract between an insurer and the insurance company in which a fixed…

Q: The effective rate of interest is 4% per annum. Calculate the value at the start of the payment…

A: Value of the annuity at the start of the payment stream with advance annual payment is calculated as…

Q: An annuity pays $1000 at the end of each year for 4 years and then $2000 at the end of each year for…

A: Required :The discounted value of these cash flows.

Q: You borrow a GPM of $120,000 with annual payments and 30-year term. The interest rate is 10%. The…

A: To solve this problem, we can use the formula the present value of a growing annuity. The formula…

Q: Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of…

A: 1. Present value of annuity when payments are made at the end of year.PV = A * where,PV = Present…

Q: Find the final amount in this retirement account, in which the rate of return on the account and the…

A: We can calculate the retirement amount with the help of following formulae:   =FV (RATE, NPER,PMT)…

Q: what is the value of the annuity today

A: We can determine the PV of annuity to year 3 and then discount it to year 0 using PV formula. r =…

Q: A 20-year annuity was purchased with $180,000 that had accumulated in an RRSP. The annuity provides…

A: EMI or monthly mortgage payments are the fixed amount paid by the borrower to the lender that…

Q: Calculate the present value of annuity with 30 annual payment which pays an initial payment of…

A: Present value is the equivalent value today of the future money to be received in the future based…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.