Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Chapter 9, Problem 27P
Summary Introduction
To calculate: The
Introduction:
Future Value:
The value of an investment or asset in a future time period is termed as future value. It is calculated by multiplying the
Annuity Due:
The annuity payment not paid straightaway at the beginning of each year is termed as the annuity due.
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Fill in each blank so that the resulting statement is true.
A/An . .
is a sequence of equal payments
made at equal time periods.
Value of an annuity
Annuity
Principal
Mortage
To determine the converted table factor for the present value of an annuity due, one must find the factor for the present value of an ordinary annuity for
n + 1 and then add 1.
n − 1 and then subtract 1.
n − 1 and then add 1.
n + 1 and then subtract 1.
Which 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)^n
Chapter 9 Solutions
Foundations of Financial Management
Ch. 9 - Prob. 1DQCh. 9 - How is the present value of a single sum related...Ch. 9 - Prob. 3DQCh. 9 - Does inflation have anything to do with making a...Ch. 9 - Adjust the annual formula for a future value of a...Ch. 9 - If, as an investor, you had a choice of daily,...Ch. 9 - What is a deferred annuity? (LO9-4)Ch. 9 - Prob. 8DQCh. 9 - Prob. 1PCh. 9 - Prob. 2P
Ch. 9 - a. What is the present value of $140,000 to be...Ch. 9 - If you invest $9,000 today, how much will you have...Ch. 9 - Prob. 6PCh. 9 - Your uncle offers you a choice of $105,000 in 10...Ch. 9 - Your father offers you a choice of $105,000 in 12...Ch. 9 - Prob. 9PCh. 9 - How much would you have to invest today to receive...Ch. 9 - If you invest $8,500 per period for the following...Ch. 9 - Prob. 12PCh. 9 - Mrs. Crawford will receive $7,600 a year for the...Ch. 9 - Phil Goode will receive $175,000 in 50 years. His...Ch. 9 - Sherwin Williams will receive $18,500 a year for...Ch. 9 - Carrie Tune will receive $19,500 for the next 20...Ch. 9 - The Clearinghouse Sweepstakes has just informed...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - At a growth (interest) rate of 10 percent...Ch. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Juan Garza invested $20,000 10 years ago at 12...Ch. 9 - Prob. 26PCh. 9 - Prob. 27PCh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - You need $28,974 at the end of 10 years, and your...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33PCh. 9 - Prob. 34PCh. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Del Monty will receive the following payments at...Ch. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Prob. 41PCh. 9 - Prob. 42PCh. 9 - Prob. 43PCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Your younger sister, Linda, will start college in...
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- To find the present value (PV) of an ordinary annuity, a. the interest is compounded and then subtracted from the FV. O b. each payment is divided by (1+1)* c. each payment is multiplied by (1+1). O d. the future value (FV) is divided by the interest rate. e. the future value is divided by (1+1)*:arrow_forwardAn even stream of payments over equal time periods where the interest rate is constant is referred to as a(n): a) Post-annuity. Ob) Annuity. c) Pre-annuity. d) Accumulated Annuity due.arrow_forwardProve: FVA of an Ordinary Annuity times (1+i) = FVA of an Annuity Due, where i= interest rate. SHow all workarrow_forward
- 1. Which statement is FALSE? A. Future value annuity is an example of annuity. B. A perpetuity is an annuity that has maturity period. C. An annuity is a series of equal payment made for a specified number of years. D. Ordinary annuity is an annuity in which the cash flows occur at the end of each period.arrow_forwardLETS START I. Matching type. Directions: Read each item carefully. Match Column A with the correct answer on Column B, write only the letter of answer on the blank provided. 1. An annuity where the payment interval is not the same as the a) Annuity b) Simple Annuity c) General Annuity interest period. 2. Type of annuity in which the payments are made at beginning - of each payment interval. d) Ordinary Annuity (or Annuity Immediate) e) Annuity Due 3. An annuity where the payment interval is the same as the interest period. - 4. An annuity in which payments begin and end at definite times. 5. Sum of present values of all the payments to be made during f) Annuity Certain g) Contingent Annuity the entire term of the annuity. h) Term of an Annuity (t) 6. Time between the first payment interval and last payment i) Regular or Periodic interval. Payment (P) 7. An annuity in which the payments extend over an indefinite (or j) Amount (Future Value) of indeterminate) length of time. 8. Sum of…arrow_forward1) To find the value of an annuity due using the tables, only 1 extra period needs to be added to the number of periods: true or false ? 2) Maturity value is equal to principle plus interest when considering a Treasury Bil: true or false ? 3)What are the differences between an ordinary annuity and an annuity due?arrow_forward
- An [Select] is a sequence of equal period payments. If payments are made at the end of each time interval, the annuity is called an [Select]arrow_forwardAn ordinary annuity is best defined by which one of the following? a. Increasing payments paid for a definitive period of time. b. Equal payments paid at the end of regular intervals over a stated time period. c. Equal payments paid at the beginning of regular intervals for a limited time period. d. Equal payments that occur at set intervals for an unlimited period of time.arrow_forwardWhich of the following statements is CORRECT? The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year. The cash flows for an annuity due must all occur at the beginning of the periods. The cash flows for an ordinary annuity occur at the beginning of the periods. If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as an ordinary annuity. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.arrow_forward
- In order to compute the present value of an annuity, it is necessary to know the 1. discount rate. 2. number of discount periods and the amount of the periodic payments or receipts. ○ 1 O something in addition to 1 and 2 O both 1 and 2 ○ 2arrow_forward1.Which of the following statements is CORRECT? Statement 1. The difference between the PV of an annuity due and the PV of an ordinary annuity is that each of the payments of the annuity due is discounted by one more year (period). Statement 2. The difference between an ordinary annuity and an annuity due is that each of the payments of the annuity due earns interest for one additional year (period). Statement 3. An annuity is a series of equal payments made at fixed equal-length intervals for a specified number of periods. Statement 3 only. All of the statements are correct. None of the statement is correct. Statement 1 only. Statement 2 only. Given some amount to be received several years in the future, if the interest rate increases, the present value of the future amount will Be higher Be variable. Be lower. Cannot tell. Stay the same. WITH EXPLANATION PLEASEarrow_forwardWhich of the following is not true regarding an annuity due? Select the correct response: It is a series of equal cash flows. Payments are made at the start of each period. It is also known as deferred annuity Cash flows occurs for a specific time.arrow_forward
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