(Related to Checkpoint 6.5) (Calculating the present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $4,500 at the end of year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 13%? What if the appropriate discount rate is 11%? a. If the appropriate discount rate is 13%, the present value of the growing perpetuity is $ round to the nearest cent
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- (Related to Checkpoint 6.5) (Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $5,500 at the end of year one and the annual cash flows grow at a rate of 3% per year indefinitely, if the appropriate discount rate is 11%? What if the appropriate discount rate is 9%? a. If the appropriate discount rate is 11%, the present value of the growing perpetuity is $ (Round to the nearest cent.) b. If the appropriate discount rate is 9%, the present value of the growing perpetuity is $ (Round to the nearest cent.) Next abc IMG P Type here to search F6 F7 F5 Esc F3 F4 F1 F2 %23 124 % 2 3 W R Tab F G S CapsLk(Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $3,500 at the end of year one and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 15%? What if the appropriate discount rate is 13%?What is the present value of a perpetuity stream of cash flows that pays P1,000 at the end of year one, and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 8%?
- What is the present value of a perpetual stream of cash flows that pays $ 7,500 at the end of year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 9%? What if the appropriate discount rate is 7%? Question content area bottom Part 1 a. If the appropriate discount rate is 9%, the present value of the growing perpetuity is $ enter your response here . (Round to the nearest cent.)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)This problem demonstrates the dependence of an annuity's future value on the size of the periodic payment. Suppose a fixed amount will be invested at the end of each year and that the invested funds will earn 5.3% compounded annually. What will be the future value of the investments after 15 years if the periodic investment is: (Do not round intermediate calculations and round your final answers to 2 decimal places.) Investment Future Value a. $2,300 per year $ b. S3, 300 per year $ c. S4, 300 per year $
- Calculate the present value at t=0 (now) of the following cash flows: D. $100 every 3 years forever, with the first payment at t=3 (t counts years), where the effective annual rate is .05 (i.e. 5%) E. $1000 every 3 years forever, with the first payment at t = 3 (t counts years), where the effective annual rate is .05 (i.e., 5%). F. $1000 every 3 years forever, with the first payment at t = 3 (t counts years), where the effective annual rate is .10 (i.e., 10%).What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of year one and then grows at a rate of 6% per year indefinitely? The rate of interest used to discount the cash flows is 10%. The present value of the growing perpetuity is $enter your response here. (Round to the nearest cent.)Consider a stream of cash flows, where you receive $2,000.00 per year for 20 yearsEXCEPT year 12 during which you receive only $1,000.00. If the current market rate ofinterest is 7.200% (compounded annually), then what is the present value of this stream ofuneven cash flows? Hint: there are several ways to solve this problem but see if you cansolve it using a single annuity formula.
- The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive interest rate. An annuity that pays $500 at the end of every six months An annuity that pays $1,000 at the end of each year An annuity that pays $1,000 at the beginning of each year*** This is the correct option**** An annuity that pays $500 at the beginning of every six months A. An ordinary annuity selling at $2,514.15 today promises to make equal payments at the end of each year for the next eight years (N). If the annuity’s appropriate interest rate (I) remains at 8.00% during this time, the annual annuity payment (PMT) will be . B. You just won the lottery. Congratulations! The jackpot is $10,000,000, paid in eight equal annual payments. The…The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive interest rate. O An annuity that pays $500 at the beginning of every six months O An annuity that pays $500 at the end of every six months O An annuity that pays $1,000 at the beginning of each year O An annuity that pays $1,000 at the end of each year An ordinary annuity selling at $4,947.11 today promises to make equal payments at the end of each year for the next eight years (N). If the annuity's appropriate interest rate (1) remains at 6.50% during this time, the annual annuity payment (PMT) will be You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in eight equal annual payı The first payment on the lottery jackpot will be made today. In present value terms, you really won -assuming…Consider two streams of cash flows, A and B. Stream A's first cash flow is $10,800 and is received three years from today. Future cash flows in stream A grow by 3 percent in perpetuity. Stream B's first cash flow is -$9,800, occurs two years from today, and will continue in perpetuity. Assume that the appropriate discount rate is 11 percent. a. What is the present value of each stream? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round the answers to 2 decimal places. Omit $ sign in your response.) Present value Stream A Stream B b. Suppose that the two streams are combined into one project, called C. What is the IRR of project C? (Do not round intermediate calculations. Round the answer to 2 decimal places.) IRR 7% c. What is the correct IRR rule for Project C? Accept the project if the discount rate is above the IRR. Accept the project if the discount rate is below the IRR. Accept the project if the discount rate is equal the IRR.