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Question 5: An annuity contract will make 8 annual payments and the first payment occurs exactly a year from today. If the annuity has a 9.2% rate and a current PV or price of $308.98, then what must be the size of its annual payments?

Question 5: An annuity contract will make 8 annual payments and the first payment occurs exactly a year from today. If the annuity has a 9.2% rate and a current PV or price of $308.98, then what must be the size of its annual payments?

Essentials Of Investments
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
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Question 5: An annuity contract will make 8 annual payments and the first payment occurs exactly a year from today. If the annuity has a 9.2% rate and a current PV or price of $308.98, then what must be the size of its annual payments? Question 6: An annuity makes monthly payments of $235 at the end of every month. If it has a term of 60 months and an annual interest rate of 6%, then what is its present value? Question 7: For the mixed stream of cash flows shown in the following table, determine the future value at the end of the final year if deposits are made into an account paying annual interest of 12% assuming no withdrawals are made during the period and that the deposits are made: a. At the end of each year. b. At the beginning of each year. Question 8: Year 1 2 3 4 5 Cash Flows 30,000 25,000 20,000 10,000 5,000 Construct a Loan Amortization Schedule for a $6000, 10% interest rate loan that is re-paid semi-annually over 4 years. (Hint: First solve for the semi-annual payment, then construct the schedule)
Transcribed Image Text:Question 5: An annuity contract will make 8 annual payments and the first payment occurs exactly a year from today. If the annuity has a 9.2% rate and a current PV or price of $308.98, then what must be the size of its annual payments? Question 6: An annuity makes monthly payments of $235 at the end of every month. If it has a term of 60 months and an annual interest rate of 6%, then what is its present value? Question 7: For the mixed stream of cash flows shown in the following table, determine the future value at the end of the final year if deposits are made into an account paying annual interest of 12% assuming no withdrawals are made during the period and that the deposits are made: a. At the end of each year. b. At the beginning of each year. Question 8: Year 1 2 3 4 5 Cash Flows 30,000 25,000 20,000 10,000 5,000 Construct a Loan Amortization Schedule for a $6000, 10% interest rate loan that is re-paid semi-annually over 4 years. (Hint: First solve for the semi-annual payment, then construct the schedule)
Question 1: Calculate the present value of $5,000 received 5 years from today if your investments pay: a. 6% compounded annually b. 8% compounded annually C. 10% compounded annually d. 10% compounded semi-annually What do your answers to these questions tell you about the relation between sent values and interest rates and between present values and the number of compounding periods per year? Question 2: Suppose that you grow money in an account for four years at a return rate of 10%. Then this future amount is later invested for another four years. If your money triples by the end of the eight years total, then (to one decimal) what rate of return did you earn over the latter four years? 100 FV4 0 + 4 240 Question 3: A contract features a future flow of $46,000 three years from today. If you can now purchase that flow for $42,201.84, then what annual implied return would you earn on this contract? ㅏ 0 Question 4: What is the present value of the following uneven stream? FV8=300 795 1 + 628 2 179 3 k= 11.5%
Transcribed Image Text:Question 1: Calculate the present value of $5,000 received 5 years from today if your investments pay: a. 6% compounded annually b. 8% compounded annually C. 10% compounded annually d. 10% compounded semi-annually What do your answers to these questions tell you about the relation between sent values and interest rates and between present values and the number of compounding periods per year? Question 2: Suppose that you grow money in an account for four years at a return rate of 10%. Then this future amount is later invested for another four years. If your money triples by the end of the eight years total, then (to one decimal) what rate of return did you earn over the latter four years? 100 FV4 0 + 4 240 Question 3: A contract features a future flow of $46,000 three years from today. If you can now purchase that flow for $42,201.84, then what annual implied return would you earn on this contract? ㅏ 0 Question 4: What is the present value of the following uneven stream? FV8=300 795 1 + 628 2 179 3 k= 11.5%
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