(a)Calculate the present value of an annuityof £1000 paid at the endof each year for 15 yearswith an interest rate of 2.5% per annum equivalent. (b)How much more needs to be added to the fund to make this an annuity duewith the same value (c)The annuity is to be paid continuouslyat the rate of £1000 per annum. What is the present value now?

Q: What is the present value of an ordinary annuity of $1,000 per year for 9 years discounted back to…

A: Present value of annuity payment - it means present value of future annual equal payment made to a…

Q: Compute the present value of a perpetuity that pays $6,744 annually given a required rate of return…

A: Perpetuity is a financial term that refers to a stream of cash flows or a series of payments that…

Q: A. An ordinary annuity selling at $2,514.15 today promises to make equal payments at the end of each…

A: In ordinary annuity, payment occurs at the end of the every period. Value of annuity is the present…

Q: A An ordinary annuity which pays out equal cash payments of $100 each year for 5 years. B A deferred…

A: Ordinary is the annuity in which there are payments at the end of period and not at the beginning of…

Q: What is the present value of an annuity that pays $58 per year for 13 years and an additional $1,000…

A: We can make use of the financial calculator to obtain the present value, PV. Inputs: I/Y = rate =…

Q: What is the difference in present value between a perpetuity that pays $500 per year and an ordinary…

A: Annual payment (A) = $500 n = 23 years for ordinary annuity r = 7%

Q: a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of…

A: In this we have to calculate present value FACTOR of annuity and from that we can  calculate the…

Q: 1) An Annuity of $1200 paid every quarter for 10 years has a current/present value of $ 32826.58.…

A: The first part of the question is asking for the interest rate of an annuity. The formula for the…

Q: A continuous annuity of $12,000 per year is to be funded by steady withdrawals from a savings…

A: Annuity Amount = 12,000 per year Interest Rate = 6% Continuous Compounding

Q: What is the future value of an ordinary annuity of $1,000 per year for 9 years compounded at 10…

A: Given: Annual cash flow (A)=$1000 Number of years (n) =9 years Interest rate(r) = 10% = 0.10

Q: What is the future value of an ordinary annuity that pays $4,600 per year for 4 years? The…

A: Annuity = a = $4600Time = t = 4 YearsInterest Rate = r = 7%

Q: An annuity pays out $20000 per year. Because of inflation, each year one dollar is worth what 0.95…

A: Annuity per year = $20,000Because of inflation, each year 1 dollar is worth what $0.95 was worth of…

Q: lculate the compounding factor that would be used to determine the future value of an annuity for an…

A: In calculation of the future value of annuity we need future value annuity factors and these are…

Q: Suppose you are going to receive $5,000 per year for 8 years. The appropriate interest rate is 10…

A: PMT = $5000r =0.10n=8PV of ordinary annuity=?PV of annuity due=?

Q: If the present value of an ordinary, 6- year annuity is $7,200 and inter present value of the same…

A: In ordinary annuity there are payments at the end of period only and in annuity due payments are at…

Q: What is the present value of a 15 year annuity with the first payment of $65,000 (all payments are…

A: present value of a 15 year annuity with the first payment of $65,000 (all payments are the same…

Q: If the present value of an ordinary, six-year annuity is $8,500 and the interest rates are 9.5…

A: Given: Resent value of Ordinary Annuity = $8500 Interest Rate = 9.5% Time =6 years So, the value of…

Q: Suppose an annuity pays $2000 at the end of each 3 month period for 3.5 years at an interest rate of…

A: given, A = $2000 n = 3.5 r = 4% pa but it is compounded quarterly therefore, frequency of…

Q: Suppose an annuity will pay $14,000 at the beginning of each year for the next 5 years. How much…

A: Annual payment (P) = $14,000 Interest rate (r) = 6.5% Period (n) = 5 Years

Q: a. Calculate the annual cash flows ( annuity payments) from a fixed - payment annuity if the present…

A: Annual cash flows refer to the amount that defines the inflow and outflow of the cash during the…

Q: The present value of an annuity stream of $100 per year is $920 when valued at a 10% rate. By…

A: The annuity in which payments that are made at the beginning of each period, rather than the end, it…

Q: hat is the present value of a perpetuity paying $1500 each year, if the effective annual interest…

A: A perpetuity is a series of uniform cash flows over an indefinite period of time.

Q: 10) An annuity is set up that will pay $1500 per year for ten years. What is the present value (PV)…

A: Solution:- When an equal amount is paid each period, it is called annuity. Present value of annuity…

Q: A continuous 5-year annuity pays at the rate of e-0.01t-+0.5t dollars per annum at time t (0 <t <…

A: Present value is the value of an asset in today’s time. It tells how much money is worth now.…

Q: Determine the present value of an annuity due of $5,000 per year for 15 years discounted back to the…

A: Using excel PV function

Q: If the present value of an ordinary, 6-year annuity is $9,400 and interest rates are 9.5 percent,…

A: Time value of money is the concept widely used by the management to determine the worth of money…

Q: A perpetuity will make a sequence of annual payments of 2800, 3000, 3200, ..., with the first…

A: A perpetuity is a type of annuity. To be more specific a perpetuity is that annuity that goes on…

Q: what's the future value of the same annuity due?

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…

Q: the next 3 years (ordinary annuity). If the appropriate required rate of return (discount rate) is…

A:

Q: (Present value of a perpetuity) At a discount rate of 6.50%, find the present value of a perpetual…

A: Step 1:i) Perpetuity Payment per year = $2,000Discount rate = 6.50%Calculating the Present Value of…

Q: annual payments of $1,500 per year, at a disco

A: PV = PMT * [(1 - (1 + r)^(-n)) / r]Where:PV is the present value of the annuityPMT is the amount of…

Q: Find the future value of an annuity due with an annual payment of $9,000 for two years at 7.5%…

A: future value of annuity due is a series of payments made at the beginning of each period

Q: What is the present value of an ordinary annuity of 2,200 per year for 15 years discounted back to…

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

Q: An annual perpetuity has a constant cash flow of $1000.  If the interest rate is 7% compounded…

A: Given, Annual cash flow: $1,000Interest rate: 7%Present value of perpetuity=Annual cash…

Q: Suppose that an individual invests $2,500 at the end of each of the next 6 years and earns an…

A: Whenever we are finding present value of a series of fixed payments made in the future, it is called…

Q: 5. Consider an annuity where you receive $1,000 payments at the end of each year for the next 20…

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

Q: Please assume an annuity due of $100,000 a year for 10 years.  Assuming a discount rate of 6%,…

A: The objective of this question is to calculate the present value of an annuity due. An annuity due…

Q: Suppose you are going to receive $11,000 per year for 8 years. The appropriate interest rate is 11…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: What is thevpresent value of an annuity of 1,600 per year for 10 years, with the first payment…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: If the future value of an ordinary, 5-year annuity is $6,000 and interest rates are 8 percent,…

A: Money received or paid out today is worth more than the same amount of money in the future because…

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.