Suppose that you have inherited an annuity that will initially pay $1,755 six years from now. Each of the following 30 annual payments will be 3% larger than the prior payment. Assuming that the annual opportunity cost of capital is 7%, what is the value of this annuity today? Round your final answer to two decimals.

Q: Suppose today is January 1, 2024 and you are given two options: a. an annuity that pays you 1000…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: Use graphical approximation techniques or an equation solver to approximate the desired interest…

A: Nominal rate:The nominal rate, in the realm of finance, refers to the stated or advertised interest…

Q: Calculate the present value of a perpetuity of $500 per year if the market interest rate is 6%.

A: Given details are : Perpetuity amount = $500 Market Interest rate = 6% We need to compute the…

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 difference in present value between a perpetuity that pays $500 per year and an ordinary…

A: Annual payment (A) = $500 n = 23 years for ordinary annuity r = 7%

Q: You want to invest in an annuity that will pay you $10,500 per year for the first 4 years and $7,200…

A: The compounding rate of interest is always more beneficial to the investor because it offers more…

Q: a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of…

A: Present value is an estimate of the present value of future cash values ​​that may be received at a…

Q: What’s the present value of a perpetuity that pays $1500 per year if the appropriate  interest rate…

A: Cash flow per year is $1500 The interest rate is 15% To Find: the present value of a perpetuity

Q: Find the future value of the following ordinary annuities. Payments are made and interest is…

A: Given, The payments $4000 Interest rate is 10% Term is 20 years

Q: If you want to be paid from a 14 year ordinary annuity with a guaranteed rate of 2.208% compounded…

A: In finance, the term annuity represents a sequence of cash flows that contain a fixed payment at…

Q: What is the future value (in $) of an annuity of $4,634 for 15 years if the discount rate is 5.79…

A: Future value refers to the compounded value of the future cash flows for the given period of time…

Q: What is the future value of a 6%, 10-year ordinary annuity that pays $200 each year?  If this were…

A: The future value of annuity is calculated using the formula below:

Q: Calculate the present value of a four-period annuity of $200 per year that begins two years from…

A: Present value is calculated by discounting all the future cashflows

Q: Find the future value of an annuity of $1400 paid at the end of each year for 15 years, if interest…

A: Time value of money :— According to this concept, value of money in present day is greater than the…

Q: What is the future value of a $590 annuity payment over four years if interest rates are 8 percent

A: An annuity refers to a series of cash flow that occurs on a periodic basis. Here $590 is occurring…

Q: Assume you are to receive a 5-year annuity with annual payments of £1,000. The first payment will be…

A: The Future Value of an Ordinary Annuity refers to the concept which gives out the compounded or…

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: A perpetuity pays a constant dividend of $2.4 every year forever. Its current price is $42.98.…

A: The duration of a perpetuity is infinite. This is because a perpetuity pays a constant stream of…

Q: An annuity pays $11 per year for 100 years. what is the future value (PV) of this annuity at the end…

A: Using The Future value function in excel

Q: You will receive a cash payment of $7072 in 7 years. If the relevant interest rate is 19.89%, how…

A: Time Value of Money states that a dollar earned today is more valuable than any time in the future,…

Q: Use graphical approximation techniques or an equation solver to approximate the desired interest…

A: Annual Payment = p = $1000Time = t = 5 YearsFuture Value of Payment = fv = $5700.46

Q: You are paid £2,500 annually for 6 years, with the first payment due in one year and the last…

A: Present value = Annuity * PVA of 1

Q: If you put up $51,000 today in exchange for a 6.25 percent, 15-year annuity, what will the annual…

A: Solution- We know that  PV = PMT [(1-(1+r)^-n)/r] Where PMT= Periodic payment r= rate n= number of…

Q: You buy an ordinary annuity today for $120,583, which promises to pay you $11,256 per year. If the…

A: An annuity refers to a series of cash flows that occurs on a periodic basis. The cash flow series…

Q: Estimate the present value of an annuity if payments are $1000 monthly for 15 years and the account…

A: PVA=P×1-e-rter-1where,r= ratet= no  of years

Q: Find the monthly payment that will yield the future value of $255,000 using an ordinary annuity at…

A: Here,FutureValue (FV) is $255,000Interest Rate (r) is 10.75%Time Period (n) is 42 yearsCompounding…

Q: Use the formula for the future value of an ordinary annuity to solve for n when A= $6,000, the…

A: Solve for n

Q: What is the future value of an annuity with annual cashflows of $4,000 for 38 years? The interest…

A: Future value of an annuity is the future value of stream of same annual cash flows which takes place…

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.