Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
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Textbook Question
Chapter 4.5, Problem 1CC
How do you calculate the
- a. Perpetuity?
- b.
Annuity ? - c. Growing perpetuity?
- d. Growing annuity?
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3) How do you calculate (mathematically) the present value (PV) of a(n):
(a) perpetuity
(b) annuity
(c) growing perpetuity
(d) growing annuity
An annuity is a method for calculating the future value of a single payment or a series of payments. What do you think?
question: Identify the different types of annuities, calculate the present value and future value of both an ordinary annuity and an annuity due, and calculate the relevant annuity payments.
Chapter 4 Solutions
Corporate Finance
Ch. 4.1 - Prob. 1CCCh. 4.1 - Prob. 2CCCh. 4.2 - Prob. 1CCCh. 4.2 - Prob. 2CCCh. 4.2 - Prob. 3CCCh. 4.3 - Prob. 1CCCh. 4.3 - Prob. 2CCCh. 4.4 - Prob. 1CCCh. 4.4 - What benefit does a firm receive when it accepts a...Ch. 4.5 - How do you calculate the present value of a a....
Ch. 4.5 - How are the formulas for the present value of a...Ch. 4.6 - Prob. 1CCCh. 4.6 - Prob. 2CCCh. 4.7 - Prob. 1CCCh. 4.7 - Prob. 2CCCh. 4.8 - Prob. 1CCCh. 4.8 - Prob. 2CCCh. 4.9 - Prob. 1CCCh. 4.9 - Prob. 2CCCh. 4.A - Your grandmother bought an annuity from Rock Solid...Ch. 4.A - Prob. A.2PCh. 4 - You have just taken out a five-year loan from a...Ch. 4 - Prob. 2PCh. 4 - Calculate the future value of 2000 in a. Five...Ch. 4 - Prob. 4PCh. 4 - Your brother has offered to give you either 5000...Ch. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Your daughters currently eight years old. You...Ch. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - Suppose you receive 100 at the end of each year...Ch. 4 - You have just received a windfall from an...Ch. 4 - Prob. 13PCh. 4 - You have been offered a unique investment...Ch. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - How would your answer to Problem 16 change if the...Ch. 4 - The British government has a consol bond...Ch. 4 - What is the present value of 1000 paid at the end...Ch. 4 - You are head of the Schwartz Family Endowment for...Ch. 4 - When you purchased your house, you took out a...Ch. 4 - Prob. 22PCh. 4 - Your grandmother has been putting 1000 into a...Ch. 4 - A rich relative has bequeathed you a growing...Ch. 4 - Prob. 25PCh. 4 - You work for a pharmaceutical company that has...Ch. 4 - Your oldest daughter is about to start...Ch. 4 - A rich aunt has promised you 5000 one year from...Ch. 4 - You are running a hot Internet company. Analysts...Ch. 4 - Prob. 31PCh. 4 - Prob. 32PCh. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - Prob. 38PCh. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Prob. 42PCh. 4 - Prob. 43PCh. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51P
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- Future value of an ordinary annuity. Fill in the missing future values in the following table for an ordinary annuity:arrow_forwardThe total amount of the annuity payments and the accumulated interest on those payments is known as the future value of the annuity.arrow_forwardFuture Value of an Annuity Refer to each case in the table below to answer what is required in this problem. Required: Find the future value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity—ordinary or annuity due—is preferable? Explain why.arrow_forward
- 1. Show Future Value examples of a) Lump Sum b) annuity. 2. Show Present value of a) Lump Sum and b) annuityarrow_forwardIf you know the present value of an ordinary annuity, how can you find the PV of thecorresponding annuity due?arrow_forwardThe process that determines the present value of a single payment or stream of payments to be received is ________. A. compounding B. discounting C. annuity D. lump-sumarrow_forward
- Who is the person who will receive lifetime payments from an annuity? OA) Administrator O B) Decedent OC) Executor OD) Annuitantarrow_forwardShow that the present value of annuaity due is one period accumulated value of the present value of annuity immediate.arrow_forwarddiffrentiate between a regular annuity and growing annuityarrow_forward
- Rank the following from highest present value to lowest present value. Assume all else equal. v An annuity with 10 payments v An annuity due with 15 payments v A perpetuity v An annuity with 15 paymentsarrow_forwardA lump sum amount of money that must be deposited now to provide a specified series of equal payments (annuity) in the future is known as the future value of an annuity. O True O Falsearrow_forwardWhich of following formulas is used to calculate the present value of a perpetual annuity? Seleccione una: a. P= f / (1+i)^n b. P= f / (i - g) c. P= a / (i - g) d. P= a / (1+i)^n e. F = P * (1+i)^narrow_forward
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What is an Annuity? Are Annuities a Good Investment? Basics of an Annuity, a Whiteboard Animation; Author: Learn to invest;https://www.youtube.com/watch?v=Wq7nq8Gx78w;License: Standard YouTube License, CC-BY