PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 26PS
a.
Summary Introduction
To determine: The PV if the payment arrives in one-year from now.
b.
Summary Introduction
To determine: The PV if the first payment arrives in 6 months.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Finance
An annuity-pays 18,000 per year for five years. The annual interest rate is 6%.
Find the present value of the annuity in each of the following cases:
i) One payment of 18,000 per year, valued one year before the first payment
ii) Monthly payment of 1,500, valued one month before the first payment
iii) Quarterly payments of 4,500, valued at the time of the first payment
iv) Payment made continuously, valued when the payment begins
without using exel, show steps and formula used
An annuity pays 8 at the end of each year for five years, starting
at the end of the 12th year. Determine the value of the annuity immediately before the first payment using an annual effective interest rate of 7%.
Chapter 2 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 2 - (FV) In 1880, five aboriginal trackers were each...Ch. 2 - Prob. 2SQCh. 2 - (PV) Your company can lease a truck for 10,000 a...Ch. 2 - (RATE) Ford Motor stock was one of the victims of...Ch. 2 - Prob. 5SQCh. 2 - Prob. 6SQCh. 2 - Prob. 7SQCh. 2 - (NOMINAL) What monthly compounded interest rate...Ch. 2 - Opportunity cost of capital Which of the following...Ch. 2 - Opportunity cost of capital Explain why we refer...
Ch. 2 - Prob. 3PSCh. 2 - Compound interest New Savings Bank pays 4%...Ch. 2 - Compound interest In 2017, Leonardo da Vincis...Ch. 2 - Future values If you invest 100 at an interest...Ch. 2 - Prob. 7PSCh. 2 - Future values In the five years preceding the end...Ch. 2 - Discount factors a. If the present value of 139 is...Ch. 2 - Prob. 10PSCh. 2 - Prob. 11PSCh. 2 - Present values What is the PV of 100 received in:...Ch. 2 - Prob. 13PSCh. 2 - Present values A factory costs 800,000. You reckon...Ch. 2 - Present values Recalculate the NPV of the office...Ch. 2 - Present values and opportunity cost of capital...Ch. 2 - Perpetuities An investment costs 1,548 and pays...Ch. 2 - Perpetuities You have just read an advertisement...Ch. 2 - Growing perpetuities A common stock will pay a...Ch. 2 - Prob. 20PSCh. 2 - Prob. 21PSCh. 2 - Annuities Kangaroo Autos is offering free credit...Ch. 2 - Annuities David and Helen Zhang are saving to buy...Ch. 2 - Prob. 24PSCh. 2 - Annuities Several years ago, The Wall Street...Ch. 2 - Prob. 26PSCh. 2 - Prob. 27PSCh. 2 - Prob. 28PSCh. 2 - Prob. 29PSCh. 2 - Annuities due A store offers two payment plans....Ch. 2 - Amortizing loans A bank loan requires you to pay...Ch. 2 - Amortizing loans Suppose that you take out a...Ch. 2 - Future values and annuities a. The cost of a new...Ch. 2 - Prob. 34PSCh. 2 - Growing annuities You are contemplating membership...Ch. 2 - Prob. 36PSCh. 2 - Growing perpetuities and annuities Your firms...Ch. 2 - Compounding intervals A leasing contract calls for...Ch. 2 - Compounding intervals Which would you prefer? a....Ch. 2 - Compounding intervals You are quoted an interest...Ch. 2 - Prob. 41PSCh. 2 - Continuous compounding How much will you have at...Ch. 2 - Continuous compounding The continuously compounded...Ch. 2 - Prob. 44PSCh. 2 - Annuities Use Excel to construct your own set of...Ch. 2 - Declining perpetuities and annuities You own an...
Knowledge Booster
Similar questions
- Calculating single-payment loan amount due at maturity. Stanley Price plans to borrow 8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Stanley have to pay in five years? How much will he have to pay at maturity if hes required to make annual interest payments at the end of each year?arrow_forwardValue of an Annuity Using the appropriate tables, solve each of the following. Required: 1. Beginning December 31, 2020, 5 equal withdrawals are to be made. Determine the equal annual withdrawals if 30,000 is invested at 10% interest compounded annually on December 31, 2019. 2. Ten payments of 3,000 are due at annual intervals beginning June 30, 2020. What amount will be accepted in cancellation of this series of payments on June 30, 2019, assuming a discount rate of 14% compounded annually? 3. Ten payments of 2,000 are due at annual intervals beginning December 31, 2019. What amount will be accepted in cancellation of this series of payments on January 1, 2019, assuming a discount rate of 12% compounded annually?arrow_forwardAn annual annuity-immediate pays $2000 at the end of the first year. The last payment is at the end of the 30th year. Assuming an annual effective interest rate of 6%, calculate the present value of the annuity if (a) each subsequent payment is 5% greater than the preceding payment.arrow_forward
- Perpetuity A provides payments of 3000 every six months with the first payment six months from today. Perpetuity B provides payments of the amount of k every two years with the first payment due now. An annual effective interest rate of 4.94% is given. The two perpetuities have the same present value. Determine the value of the payment k.arrow_forwardA 16-year annuity pays $1,900 per month, and payments are made at the end of each month. The interest rate is 8 percent compounded monthly for the first five years and 5 percent compounded monthly thereafter. What is the present value of the annuity? A. $218,527.19 B. $2,675,843.15 C. $286,315.12 D. $227,446.67 E. $222,986.93arrow_forwardCalculate the future value of the following annuities, assuming each annuity payment is made at the end of each compounding period. Annuity Payment Annual Rate Interest Compounded Period Invested 1. $3,000 7% Annually 6 years 2. 6,000 8 Semiannually 9 years 3. 5,000 12 Quarterly 5 yearsarrow_forward
- Find the amount accumulated FV in the given annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $1,700 is deposited quarterly for 20 years at 7% per yeararrow_forwardThe annually compounded discount rate is 13.5%. You are asked to calculate the present value of a 16-year annuity with payments of $51,800 per year. a. Calculate the PV if the annuity payments arrive at one-year intervals. The first payment arrives one year from now. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b. Calculate the PV if the first payment arrives in six months. Following payments arrive at one-year intervals (i.e., at 18 months, 30 months, etc.). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present valuearrow_forwardThe annually compounded discount rate is 7.0%. You are asked to calculate the present value of a 14-year annuity with payments of $50,500 per year. a. Calculate the PV if the annuity payments arrive at one-year intervals. The first payment arrives one year from now. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. Calculate the PV if the first payment arrives in six months. Following payments arrive at one-year intervals (i.e., at 18 months, 30 months, etc.). Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Present value b. Present valuearrow_forward
- What is present value of annuity Aarrow_forwardA company offer annual payments of $1675 at the end of each year for the next FIVE years. a) What is the present value of this annuity discounted at 7%? b) If the same payment was given at the beginning of each year for six years. What would be the future value annuity at a discounted rate of 5.5%? c) Using data in B calculate for year two and year three.arrow_forwardAnnuities At the end of each quarter, $1000 isplaced into an account that pays 12%, compoundedquarterly. What is the future value of this annuity in 6years?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College