An investment promises a series of constant annual $4,000 payments for the next 9 years, with the first payment occurring one year from today. In the year after that, the annual payment is cut in half and continues at the new constant level each year forever. Using a discount rate of 7%, what is today's cash equivalent value for the investment? Enter year answer as a positive number and round to the nearest dollar. Type your answer.....

An investment promises a series of constant annual $4,000 payments for the next 9 years, with the first payment occurring one year from today. In the year after that, the annual payment is cut in half and continues at the new constant level each year forever. Using a discount rate of 7%, what is today's cash equivalent value for the investment? Enter year answer as a positive number and round to the nearest dollar. Type your answer.....

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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You are looking at an investment that will make annual payments of $28,000, $32,000, $66,000, and $99,000 to you each year over the next four years, respectively. All payments will be made at the end of the year. If the appropriate interest rate is 3.6 percent, what is the value of the investment offer today?
An investment will pay $150 at the end of each of the next 3 years, $200 at the end of Year 4, $400 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 4% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent. Present value: $ Future value: $
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $24,900 at the end of this year and subsequent payments that will grow at a rate of 2.9 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.) Present value $ ?
You are quoted an interest rate of 6% on an investment of $10 million. What is the value of your investment after four years if interest is compounded as follows? Note: Enter your answers in dollars, not millions of dollars. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. a. Annually b. Monthly c. Continuously a. Future value b. Future value c. Future value
Keith Riggins expects an investment of $125,473.50 to return $15,000 annually for several years. If Riggins earns a return of 10%, how many annual payments will he receive? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Present Value Annuity Payment = ון Table Factor Annual Payments payments
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $20,100 at the end of this year and subsequent payments that will grow at a rate of 3.4 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.)
An investment promises two payments of $570, on dates three and six months from today. If the required rate of return on the investment is 4.7%:What is the value of the investment today? (Do not round intermediate calculations and round your final answer to 2 decimal places.Value today $.
An investment offers $966 per year for 11 years, with the first payment occurring Zyears from now. If the required return is 9 percent, what is the value of the investment? (HINT: Remember that when you calculate the PV of the annuity, the claculator gives you the present value of the annuity 1 period before the annuity starts. So if the annuity starts in year 7, that calculator will to give you the persent value of annuity in year 6. Now you have to bring this number to period O by inputting: N=6 (1 period before the annuity starts, in your case it would be a different number depending when your annuity starts) R=9 FV=Present value of annuity you found in step 1. And you solve for PV)
You just deposited $9,500 in an investment account and will deposit $5000 more four years from now. What is the built-in functions on a spreadsheet to determine how much will be in the account 11 years from now if the rate of return is 10% per year? The built-in function is =FV (10%, 11,,9500) + FV(10%,7, ,5000) and it displays $
Assume that at the beginning of the year, you purchase an investment for $6,300 that pays $130 annual income. Also assume the investment's value has increased to $6,900 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places. Rate of return % b. Is the rate of return a positive or a negative number? Positive Negative
May I ask for an explanation of the question for a better understanding. Thank you! Which investment will you choose from the following investment opportunities: a. A one-year investment that pays 12%, compounding annually. b. A one-year investment that pays 12%, compounding monthly. c. All the choices will provide the same future value. d. A one-year investment that pays 12%, compounding quarterly.
A).$4500 will be paid 6 years and 10 months now. Find present value of payment if interest is at rate j2 = 9%. Use the practical metho. B). An investment fund guarantees to double your money in five years. What rate of j2 is implied ? C). If money doubles at certain rate of interest compound monthly in six years. How long will it take to the same amount of money to triple in valuy ?

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