An investment in consol bonds promises to provide an interest payment of $2.5 million a year in perpetuity. If the interest rate is 3.3%, what is the value of this investment?
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- What is the value of this investment on these financial accounting question?General accountingExplain the nature of the potential lending losses associated with each of the following: default risk, liquidity risk, and maturity risk. What would you pay for an annuity paying $3,000 per year for 12 years if the interest rate is 10%?
- An investment is expected to result in equal payments of $3160.00 at the end of each of the next 5 years. (ordinary annuity) If the appropriate rate of return (discount rate) is 10%, what is the present value of the annuity stream? (annual compounding)Your liabilities consist of a payment of $5 million coming due in two years and a payment of $4 million coming due in three years. The market interest rate is 2%. What are the duration and convexity of your liabilities? O 2.71 and 7.64 O 2.80 and 9.17 O 2.21 and 5.39 O 2.44 and 6.20what;s the present value of perpetuity that pays % 1, 563 per year if the appropriate interest rate is 6.8% ?
- You make an investment into a money market account at time T=0. In year T=5, the value of the money market account will be $5,000. The money market account pays an annual interest of R=6%, and interest is compounded on a quarterly basis. What is the present value of this account?D4) What is the interest income in dollars on a $10 million art financing loan priced at 8% collateralized by $15 million at the beginning of the year if the value of the collateral falls to $12 million at the end of the year?What is the yield to maturity (YTM) on a simple loan for $1,000 that requires a repayment of $3,000 in five years' time? The yield to maturity is%. (Round your response to one decimal place.)
- Evaluate the net present value of following streams of income: a. $1000 per year at an interest rate of 5% in perpetuity. b. $1000 per year at an interest rate of 5% in perpetuity. c. $1 million per year at an interest rate of 5% in perpetuity. |d. $1 million per year in perpetuity, but not beginning until year t=5 at an interest rate of 15%.Which of the following statements is CORRECT? An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%. If a loan has a nominal annual rate of 8%, then the effective rate can never be greater than 8%. If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. The present value of a 3-year, $150 annuity due will exceed the present value of a 3-year, $150 ordinary annuity.Suppose you are going to receive $11,000 per year for 8 years. The appropriate interest rate is 11 percent per year. Requirement 1: What is the present value of the payments if they are in the form of an ordinary (a)annuity (cash flow starts at the end of the first compounding period)? (Click to select) (b) What is the present value if the payments are an annuity due (cash flow starts at the beginning of the first compounding period)? (Click to select) Requirement 2: (a)Suppose you plan to invest the payments for 8 years, what is the future value if the payments are an ordinary annuity? (Click to select) (b)Suppose you plan to invest the payments for 8 years, what is the future value if the payments are an annuity due? (Click to select)
