uity X and Y provide the following payments: End of Year Y 1-10 1 K 11-20 2 21-30 1 K Annuity X and Y have equal present values at an effective annual interest rate of 7.1773%. Wha present value of X? What is K?

uity X and Y provide the following payments: End of Year Y 1-10 1 K 11-20 2 21-30 1 K Annuity X and Y have equal present values at an effective annual interest rate of 7.1773%. Wha present value of X? What is K?

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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Question

Annuity X and Y provide the following payments:
End of Year
Y
1-10
1
K
11-20
21-30
1
K
Annuity X and Y have equal present values at an effective annual interest rate of 7.1773%. What is
present value of X? What is K?

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Future value interest factor of an ordinary annuity of $1 per period at i% for n periods, FVIFA(i,n). 3.5% 4.0% 4.5% 8.0% 8.5% 9.5% Period 0.5% 1.0% 1.0000 1.0000 2.0050 2.0100 1 1.5% 2.0% 2.5% 1.0000 1.0000 1.0000 20150 2.0200 2.0250 2 3.2781 3 1.0000 2.0950 3.2940 4.6070 6.0446 4 7 8.1420 9.5491 8 9 10 16.3856 16 8699 18.5312 21.3843 24.5227 27.9750 31.7725 35.9497 26.9964 28.2129 30.8402 40.5447 45.5992 51.1591 57.2750 64.0025 71.4027 58.1767 76.7898 824164 3.0% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 9.0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0300 2.0350 2.0400 2.0450 2.0500 2.0550 2.0600 2.0650 2.0700 2.0750 2.0800 2.0850 2.0900 3.0150 3.0301 3.0452 3.0604 3.0756 3.0909 3.1062 3.1216 3.1370 3.1525 3.1680 3.1836 3.1992 3.2149 3.2306 3.2464 4.0301 4.0604 3.2622 4.0909 4.1216 4.1525 4.1836 4.2149 4.2465 4.2782 4.3101 4.3423 4.3746 4.4072 4.4399 4.4729 4.5061 4.5395 5 5.0503 4.5731 5.1010 5.1523 5.2040 5.2563 5.3091 5.3625 5.4163 5.4707…
What is the future value?
Present value of an annuity Consider the following cases. Case ◄AUA- E Amount of annuity $ 12.000 55.000 700 140.000 22.500 Interest rate 12 20 5 10 Period (years) a. Calculate the present value of the annuity assuming that it is (1) An ordinary annuity, mu 9 7 b. Compare your findings in parts al 1) and a(2). All else being identical, which of annuity-ordinary or annuity due-is preferable? Explain why. Personal Finance Problem Tume value-Annuities - Marian Kirk wishes to select the better of two 10-year annuines, C and D. Annuity C is an ordinary annuity of $2,500 per year for 10 years. Annuity D is an annuity due of $2,200 per year for 10 years. delen future value of both annuities at the end of year 10, assuming that
Annuity X pays $115 at each year-end for 3 years. Annuity Y pays $105 at the beginning of each year for 3 years. The effective annual rate is 10%. Which one is correct?A. Annuity X has a higher present value than Annuity Y.B. Annuity Y has a higher present value than Annuity X.C. Annuity X has the same present value as Annuity Y
K (Present value of an annuity due) Determine the present value of an annuity due of $2,000 per year for 25 years discounted back to the present at an annual rate of 6 percent. What would be the present value of this annuity due if it were discounted at an annual rate of 11 percent? CELE (Round to the nearest cent.) $(Round to the nearest cent.) a. If the annual discount rate is 6 percent, the present value of the annuity due is $ b. If the annual discount rate is 11 percent, the present value of the annuity due is:
what;s the present value of perpetuity that pays % 1, 563 per year if the appropriate interest rate is 6.8% ?
What is the PV of an ordinary annuity with 5 payments of $3,900 if the appropriate interest rate is 4.9%? a. $20,455.50 b. $19,858.66 c. $16,931.74 d. $17,761.39 e. $13,861.39
H3. Show proper step by step calculation
None
A loan of X is repaid with level payments of R payable at the end of each year for n years. You are given: (i) The interest paid in year 1 is 797.50. (ii) The principal repaid in year n-4 is 865. (iii) The principal outstanding at the end of year n-1 is 1,144.50. Determine X. A B с D E 9,500 10,000 10,500 11,000 11,500
Complete the ordinary annuity as an annuity due (future value) for the following: (Please use the following provided Table) Note: Do not round intermediate calculations. Round your answer to the nearest cent. $ Amount of payment Payment payable 5,000 Annually Years Interest rate 5% 5 Annuity due
(please answer both questions) At an annual effective rate of interest i=3%, find the PV of a perpetuity-immediate with annual payments of 30, 40, 50, 60, *** a) 9520 b) 10800 c) 11254 d) 12111 e) 12500 Find the PV of a perpetuity-immediate with payments of 1 in year 1, 2 in year 2, 3 in year 3,..., and 20 in year 20. After 20, the payments remain constant at 20. The annual effective rate of interest i = 4%. a) 280.75 b) 319.14 c) 353.35 d) 427.01 e) 450.00

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