In order to meet a future liability in exactly 17 years time, a company plans to invest in a fund thefollowing annuity payments:£3974 paid at the end of each quarter during the first 6 years followed by£5179 paid at the end of each 6 months until the end of year 17 (inclusive).Assuming an effective rate of interest of 2.9% per quarter-year throughout the entire 17-year period,calculate, to 2 decimal places, the total amount of fund the company will hold at the end of thisinvestment period.

Future value is the value of an investment or asset at a specified date in the future, based on the…

Answered: In order to meet a future liability in…

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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Present Value of an Annuity Determine the present value of $110,000 to be received at the end of each of four years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.
A perpetuity-due with annual payments consists often level payments of X followed by a series of increasing payments. Beginning with the eleventh payment, each payment is 1.5% larger than the preceding payment. Using an annual effective interest rate of 5%, the present value of the perpetuity is 45,000. Calculate X. B C 1,679 E 1,696 1,737 D 1,763 1,781
Determine the combined present value as of December 31, 2016, of the following four payments to be received at the end of each of the designated years, assuming an annual interest rate of 8%. Payment Year Received $5,000 2017 6,000 2018 8,000 2020 9,000 2022
An company needs to make the following annuity payments into a pension fund: £1100 paid at the beginning of each year for the first 5 years and then £1200 paid at the beginning of each year for the next 9 years and then £720 paid at the beginning of each year for the following 7 years. Calculate the amount of capital accumulated in the fund by the end of the last year, given that the rate of interest during this period is: 5.5% pa effective for the first 10 years and then 6.4% pa effective thereafter. NO tables, only formulas, please
Construct the amortization schedule for a $7000 debt that is to be amortized in 5 equal quarterly payments at 2.5% interest per quarter on the unpaid balance. How much interest must be paid?
1) $6000 at 4% compounded semiannually for 12 years Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated.
If $1000 is deposited at the end of each year for 5 years into an ordinary annuity earning 8.99% compounded annually, construct a balance sheet showing the interest earned during each year and the balance at the end of each year. Complete the balance sheet. Period Amount Interest Balance 1 $1000.00 2 $1000.00 3 $1000.00 4 $1000.00 $ $4 $1000.00 $4 $ (Round to the nearest cent as needed.)
A perpetuity makes its first annual payment of $110 exactly 17 years from today. The discount rate is 6.1% per annum compounded annually. 1) What is the present value of this perpetuity valued at exactly Year 13? (Round your answer to the nearest cent) 2) What is the present value of this perpetuity valued at exactly Year 0? (Round your answer to the nearest cent)
An annuity is paid half-yearly in arrears at a rate of 9000 per annum, for 11 years. The rate of interest is 3% per quarter-year effective. Calculate the accumulation of the annuity at the end of 11 years. Give your answer to two decimal places.
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Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2016, of a five-period annual annuity of $5,000 under each of the following situations: 1. The first payment is received on December 31, 2017, and interest is compounded annually. 2. The first payment is received on December 31, 2016, and interest is compounded annually. 3. The first payment is received on December 31, 2017, and interest is compounded quarterly.
Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $6,500 under each of the following situations: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1. The payments are received at the end of each of the five years and interest is compounded annually. 2. The payments are received at the beginning of each of the five years and interest is compounded annually. 3. The payments are received at the end of each of the five years and interest is compounded quarterly. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Deposit Date The payments are received at the end of each of the five years and interest is compour Note: Round your final answers to nearest whole dollar amount. First payment Second payment Third payment Fourth payment Fifth payment j= 3% 3% 3% 3% 3% Required 3 X Answer is complete but not entirely corre n= 4 ✓ $ 8 12 16 ✓…

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