Explanation A perpetuity is an annuity in which the payments go on forever. Use the formula for the present value of an ordinary annuity: P = R [ 1 − ( 1 + i ) − n i ] Here, P is the present value, R is the periodic payment, i is the interest rate per period, and n is the number of periods. Observe the changes in the value of P when n gets larger and larger for a given value of R and i . For example, take R = $ 50 , 000 , i = 5 % = 0.05 , and n = 5 to obtainthe value of P as follows: P ( n = 5 ) = 50 , 000 [ 1 − ( 1 + 0.05 ) − 5 0.05 ] = 1 , 000 , 000 [ 1 − 0.7835261 ] = 1 , 000 , 000 × 0.2164738 = 216 , 473.83 Increase the value of n to 10: P ( n = 10 ) = 50 , 000 [ 1 − ( 1 + 0.05 ) − 10 0.05 ] = 1 , 000 , 000 [ 1 − 0.613913 ⋯ ] = 1 , 000 , 000 × 0.386086 ⋯ = 386 , 086.75 For n = 20 , the present value will be as follows: P ( n = 20 ) = 50 , 000 [ 1 − ( 1 + 0.05 ) − 20 0.05 ] = 1 , 000 , 000 [ 1 − 0.376889 ] = 1 , 000 , 000 × 0

Finite Mathematics, Books a la Carte Plus MyLab Math Access Card Package (11th Edition)

11th Edition

ISBN: 9780133886818

Author: Margaret L. Lial, Raymond N. Greenwell, Nathan P. Ritchey

Publisher: PEARSON

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Chapter 5.3, Problem 56E

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Chapter 5.3, Problem 55E

Chapter 5.3, Problem 57E

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Finite Mathematics, Books a la Carte Plus MyLab Math Access Card Package (11th Edition)

Ch. 5.1 - 1. What factors determine the amount of interest...Ch. 5.1 - In your own words, describe the maturity value of...Ch. 5.1 - 3. What is meant by the present value of...Ch. 5.1 - We calculated the loan in Example 2(b) assuming...Ch. 5.1 - Find the simple interest. $25,000 at 3% for 9...Ch. 5.1 - Find the simple interest. 6. $4289 at 4.5% for...Ch. 5.1 - Find the simple interest. 7. $1974 at 6.3% for...Ch. 5.1 - Find the simple interest. 8. $6125 at 1.25% for...Ch. 5.1 - Find the simple interest. Assume a 360-day year....Ch. 5.1 - Find the simple interest. Assume a 360-day...

Ch. 5.1 - Find the maturity value and the amount of simple...Ch. 5.1 - Find the maturity value and the amount of simple...Ch. 5.1 - Find the maturity value and the amount of simple...Ch. 5.1 - Find the maturity value and the amount of...Ch. 5.1 - 15. Explain the difference between simple...Ch. 5.1 - Prob. 16E Ch. 5.1 - 17. What is the difference between t and n? Ch. 5.1 - In Figure 2, one line is straight and the other is...Ch. 5.1 - Find the compound amount for each deposit and the...Ch. 5.1 - Find the compound amount for each deposit and...Ch. 5.1 - Prob. 21E Ch. 5.1 - Prob. 22E Ch. 5.1 - Prob. 23E Ch. 5.1 - Find the compound amount for each deposit and the...Ch. 5.1 - Find the interest rate for each deposit and...Ch. 5.1 - Prob. 26E Ch. 5.1 - Find the interest rate for each deposit and...Ch. 5.1 - Prob. 28E Ch. 5.1 - Prob. 29E Ch. 5.1 - Find the effective rate corresponding to each...Ch. 5.1 - Find the effective rate corresponding to each...Ch. 5.1 - Prob. 32E Ch. 5.1 - Prob. 33E Ch. 5.1 - Prob. 34E Ch. 5.1 - Find the present value (the amount that should be...Ch. 5.1 - Prob. 36E Ch. 5.1 - Prob. 37E Ch. 5.1 - Prob. 38E Ch. 5.1 - Find the present value (the amount that should...Ch. 5.1 - Prob. 40E Ch. 5.1 - Prob. 41E Ch. 5.1 - Prob. 42E Ch. 5.1 - Prob. 43E Ch. 5.1 - Prob. 44E Ch. 5.1 - Find the doubling time for each of the...Ch. 5.1 - Prob. 46E Ch. 5.1 - Prob. 47E Ch. 5.1 - Prob. 48E Ch. 5.1 - Prob. 49E Ch. 5.1 - 50. Delinquent Taxes An accountant for a...Ch. 5.1 - Savings A $1500 certificate of deposit held for 75...Ch. 5.1 - Prob. 52E Ch. 5.1 - Cash Advance Fees According to an advertisement,...Ch. 5.1 - Prob. 54E Ch. 5.1 - Investments Suppose $10,000 is invested at an...Ch. 5.1 - 56. Investments In Exercise 55, notice that as...Ch. 5.1 - Prob. 57E Ch. 5.1 - Prob. 58E Ch. 5.1 - Student Loan Upon graduation from college, Warren...Ch. 5.1 - Comparing Investments Two partners agree to invest...Ch. 5.1 - Prob. 61E Ch. 5.1 - Prob. 62E Ch. 5.1 - Negative Interest Under certain conditions, Swiss...Ch. 5.1 - Negative Interest Under certain conditions,...Ch. 5.1 - Savings On January 1, 2010, Jack deposited $1000...Ch. 5.1 - Prob. 66E Ch. 5.1 - Prob. 67E Ch. 5.1 - Prob. 68E Ch. 5.1 - Prob. 69E Ch. 5.1 - 70. 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Karen...Ch. 5 - Prob. 1RE Ch. 5 - Prob. 2RE Ch. 5 - Prob. 3RE Ch. 5 - Prob. 4RE Ch. 5 - Prob. 5RE Ch. 5 - Prob. 6RE Ch. 5 - Prob. 7RE Ch. 5 - Prob. 8RE Ch. 5 - Prob. 9RE Ch. 5 - Prob. 10RE Ch. 5 - Prob. 11RE Ch. 5 - Find the simple interest for each loan. $4902 at...Ch. 5 - Prob. 13RE Ch. 5 - Prob. 14RE Ch. 5 - Prob. 15RE Ch. 5 - Prob. 16RE Ch. 5 - Prob. 17RE Ch. 5 - Find the compound amount in each loan. 18....Ch. 5 - Prob. 19RE Ch. 5 - Prob. 20RE Ch. 5 - Prob. 21RE Ch. 5 - Find the amount of interest earned by each...Ch. 5 - Find the amount of interest earned by each...Ch. 5 - Prob. 24RE Ch. 5 - Prob. 25RE Ch. 5 - Find the present value of each amount. $17,650 in...Ch. 5 - Prob. 27RE Ch. 5 - Prob. 28RE Ch. 5 - Prob. 29RE Ch. 5 - Prob. 30RE Ch. 5 - Prob. 31RE Ch. 5 - Prob. 32RE Ch. 5 - Prob. 33RE Ch. 5 - Prob. 34RE Ch. 5 - Prob. 35RE Ch. 5 - Prob. 36RE Ch. 5 - Prob. 37RE Ch. 5 - Prob. 38RE Ch. 5 - Find the future value of each annuity and the...Ch. 5 - Find the future value of each annuity and the...Ch. 5 - Prob. 41RE Ch. 5 - Prob. 42RE Ch. 5 - Prob. 43RE Ch. 5 - Prob. 44RE Ch. 5 - Prob. 45RE Ch. 5 - Find the amount of each payment that must be...Ch. 5 - Prob. 47RE Ch. 5 - Prob. 48RE Ch. 5 - Prob. 49RE Ch. 5 - Find the present value of each ordinary...Ch. 5 - Prob. 51RE Ch. 5 - Prob. 52RE Ch. 5 - Find the present value of each ordinary annuity....Ch. 5 - Prob. 54RE Ch. 5 - Find the amount of the payment necessary to...Ch. 5 - Prob. 56RE Ch. 5 - Prob. 57RE Ch. 5 - Prob. 58RE Ch. 5 - Prob. 59RE Ch. 5 - Prob. 60RE Ch. 5 - Prob. 61RE Ch. 5 - Prob. 62RE Ch. 5 - Prob. 63RE Ch. 5 - Personal Finance Carla Truss owes $5800 to her...Ch. 5 - Business Financing Candice Cotton needs to borrow...Ch. 5 - Prob. 66RE Ch. 5 - Business Investment A developer deposits $84,720...Ch. 5 - Prob. 68RE Ch. 5 - Prob. 69RE Ch. 5 - Prob. 70RE Ch. 5 - Prob. 71RE Ch. 5 - Prob. 72RE Ch. 5 - Business Financing The owner of Eastside Hallmark...Ch. 5 - Personal Finance To buy a new computer, David Berg...Ch. 5 - Prob. 75RE Ch. 5 - Prob. 76RE Ch. 5 - Prob. 77RE Ch. 5 - 78. 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Why the present value of perpetuity is given by P = R i ?

Solution Summary: The author explains that a perpetuity is an annuity in which the payments go on forever.

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Why the present value of perpetuity is given by P=Ri?

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Chapter 5 Solutions