At the end of each month for the next ten years you will receive cash flows of $50. If the appropriate discount rate is 7.2%, compounded monthly (i.e., the APR is 7.2%), how much would you pay for the

At the end of each month for the next ten years you will receive cash flows of $50. If the appropriate discount rate is 7.2%, compounded monthly (i.e., the APR is 7.2%), how much would you pay for the

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 25P

See similar textbooks

Related questions

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: 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 present value of the 3 year annuity of $270 if the discount rate is 7% if you have to…

A: The formula to compute present value of annuity as follows:

Q: How much should you be willing to pay for an annuity that begins in 3 years and pays $100 dollars…

A: The monthly discount rate, expressed as a percentage, is an important financial measure used to…

Q: dymer increase by 2% for the next year. Find the present value of this annuity if the initial…

A: The present value of annuity includes the value of annuities discounted at the rate of interest rate…

Q: An insurance annuity offers to pay you $1,000 per quarter for 20 years starting immediately. If you…

A: Excel Spreadsheet:

Q: Find the future value of an ordinary annuity of $700 paid at the end of each year for 6 years, if…

A: Future Value: It refers to the amount or future worth of an asset at a particular date in the…

Q: You purchase a 10-year annuity that pays you \$ 30000 / v * ear . The first payment will begin in…

Q: what is the present value of this stipen

A: Present Value: The present value is the present sum of a series of fixed payments. The series of…

Q: If you want to be paid from a 15 year ordinary annuity with a guaranteed rate of 4.277% compounded…

A: Annual payment (C) = $10,000 Period (n) = 15 Years rate (r) = 0.04277 (i.e. 4.277%) Present value or…

Q: Annuity will pay $200 at the end of each of the next 10 years and $600 at the end of each of the…

A: The Present Value of Annuity (PVA) is a financial concept that calculates the current worth of a…

Q: What is the future value (FV) of this perpetuity, given that the interest rate is 3%?

A: The future value of an investment forecasts the expected value of an investment at a given future…

Q: The present value of a 4-year annuity is $47,000. The first annual cash flow occurs one year from…

A: The discount rate is 4.8%The present value of the annuity table of discount rate 4.8%.PeriodAnnuity…

Q: What amount will be paid at the beginning of every month for 10 years if the present value is 20O,…

A: The payment flow which continues for a definite time period and terminates after lapse of time…

Q: You purchase an ordinary annuity with 4% interest and will receive regular quarterly payments of…

A: The interest rate is 4% Quarterly rate, the rate is 4%4= 1% Regular Quarterly payment, PMT is $4500…

Q: You purchase a $10, 000 annuity with payments at the end of each year for 30 years and an effective…

A: Present value of annuity = $10000 Interest rate (r) = 4% Annuity amount (A) = $500 Additional amount…

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: 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 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: You are going to receive a set payment at the end of each year for the next 12 years. If the proper…

A: The present value method is an important method of the time value of money. The present value is the…

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…

Q: Determine the annual payment required to fund a future annual annuity of $12,000 per year. You will…

A: Present value =cash flow×1-(1+r)-nr r = rate n = number of periods

Q: Use the appropriate formula to find how much you should deposit now at 7% interest, compounded…

A: Annual payment (C) = $1,250 Interest rate (r) = 0.07 period (n) = 15 Years Present value or amount…

Q: What is the present value of a perpetuity with payments starting one year from now. The first…

A: Present value of perpetuity can be calculated by formula that cash flow of first year divided by…

Q: What is the value of a 30-year annuity that pays $2500 a year? The annuity’s first payment will be…

A: As a fist step, let's shifts ourselves to the end of t = 10 years.Annuity, A = $ 2,500; n = number…

Q: An annuity pays $1000 at the end of each year for 5 years and then $2000 at the end of each year for…

A: The discounted value is present value of future cash receipts

Q: A perpetuity will pay $1000 per year, starting five years after the perpetuity is purchased. What is…

A: The question is based on the concept of perpetuity payment and concept of time value of money.Future…

Q: What is the present value of the annuity?

A: We can determine the PV using PV of annuity due formula as below:In the formula below:PMT = annual…

Q: What is the present value of a perpetuity with payments starting one year from now. The first…

A: A perpetuity is a type of security that pays a constant stream of fixed cash flows for an infinite…

Q: a) You deposit $200 monthly into an annuity with the goal of accumulating $180,000 after 30 years.…

A: The annual rate is the growth rate linked to an investment, loan, or savings. It captures the…

Q: You expect to receive P1,000 at the END of each of the next 3 years. You will deposit these payments…

A: Following is the computation of Future value at the end of the third year

Question

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction of annuity

VIEW

Step 2: Calculation of the amount paid for the annuity

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

You are going to receive a set payment at the end of each year for the next 12 years. If the proper discount rate for each of those amounts is 12%, then what amount of money would you need to receive at the end of each year in order to have a present value of $495.55?
You have an automatic stipend set up with your bank, where you will receive $130 per quarter for the next six years. If annual interest rates are 4.5%, what is the present value of this stipend?
You purchase a 10-year annuity that pays you \$ 30000 / v * ear . The first payment will begin in three years. What is the duration of this annuity if the rate of interest is 8%? Show your calculations
Determine the annual payment required to fund a future annual annuity of $12,000 per year. You will fund this future liability over the next five years, with the first payment to occur one year from today. The future $12,000 liability will last for four years, with the first payment to occur seven years from today. If you can earn 8 percent on this account, how much will you have to deposit each year over the next five years to fund the future liability?
Annuity will pay $200 at the end of each of the next 10 years and $600 at the end of each of the following 10 years. If at an annual rate of interest = 6%, what's the present value of this annuity?
Find the future value of an ordinary annuity of $700 paid at the end of each year for 6 years, if interest is earned at a rate of 5%, compounded annual. What is the future value?
You expect to receive P1,000 at the END of each of the next 3 years. You will deposit these payments into an account which pays 10 percent, compounded semiannually. What is the future value of these payments, that is, the value at the end of the third year?
Consider an annuity-immediate with monthly payments for twenty years. The payments are level in the course of each year, then increase by 2% for the next year. Find the present value of this annuity if the initial payment is $1,300 and i = 4%. (Round your answer to the nearest cent.)
Calculate the present value of annuity with 30 annual payments which pays an initial payment of $1,733.35 at the end of 5 years. Each subsequent annual payment is 4% larger than the previous payment. Assume the effective annual interest rate is 0.065. Give your answer to the nearest dollar.
if you want to be paid from a 15 year ordinary annuity with a guaranteed rate of 4.277% compounded annually, how much should you pay for one of these annuities if you want to receive annual payments of $10,000.00 over the 15 year period?
You are set to receive an annual payment of $11,200 per year for the next 18 years. Assume the interest rate is 6.1 percent. How much more are the payments worth if they are received at the beginning of the year rather than the end of the year?
What are the monthly payments you will receive if your retirement nest egg of $ 1,000,000 is in a 5% annuity that lasts 20 years if you receive payments at the beginning of each month?