Homework Answers
1)
effective annual rate=(1+(6%/2))^2-1=6.09%
present worth
=10000*((1-(1+6.09%)^(-50))/6.09%)
=155659.63
2)
present worth peretuity
=10000/6.09%
=164203.61
the above is answer..
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1. (a) What is the present worth of $10,000 payments made each year at a nominal...
1. (a) What is the present worth of $10,000 payments made each year at a nominal...
1. (a) What is the present worth of $10,000 payments made each year at a nominal interest rate of 6%, compounded semi-annually (i.e., twice per year)? (10 points) i. For a period of 50 years? (2 points) ii. In perpetuity? (2 points) (b) What is the present worth of $10,000 payments made biannually i.e., every two years) at a nominal interest rate of 6%? a) For a period of 50 years? (2 points) b) in perpetuity (2 points)
(b) What is the present worth of $10,000 payments made biannually (i.e., every two years) at...
(b) What is the present worth of $10,000 payments made biannually (i.e., every two years) at a nominal interest rate of 6%? a) For a period of 50 years? (2 points) b) In perpetuity (2 points)
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Page 2 of 6 Problem 2 A certain U.S. Treasury bond that matures in 15 years has a $10,000 face value. This means that the bondholder will receive $10,000.00 cash when the bond's maturity date is reached. The bond pays an annual nominal interest of 8% of its face value in semi-annual installments starting at the end of the 1st semi-annual period. a) Draw a cash flow diagram showing bond payments. b) What is its present worth. PW, ifthe prevailing...
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Quarter-end payments of $1,590 are made to settle a loan of $35,280 in 8 years. What is the effective interest rate? % Round to two decimal places Raymond leased equipment worth $30,000 for 6 years. If the cost of borrowing is 6.79% compounded semi-annually, calculate the size of the lease payment that is required to be made at the beginning of each half-year. Round to the nearest cent
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2. What is the present worth of a series of equal end-of-quarter payments of $1,500 if the series extends over a period of eight years at 9% interest compounded monthly? (15 points) You are not required to calculate the final answer for this question. You will get full credits with the case number (I/II/III), the complete first three steps, and the last step with the factor equation (in last step clearly showing which factor, what the interest rate is, and...
2. What is the present worth of a series of equal end-of-quarter payments of $1,500 if the series extends over a pe...
2. What is the present worth of a series of equal end-of-quarter payments of $1,500 if the series extends over a period of eight years at 9% interest compounded monthly? (15 points) You are not required to calculate the final answer for this question. You will get full credits with the case number (I/II/III), the complete first three steps, and the last step with the factor equation (in last step clearly showing which factor, what the interest rate is, and...
An perpetuity has continuous payments at a rate of 800 per year. Find the present value...
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Problem 2 If a loan is taken with total annual payments of $10,000/year for 10 years,...
Problem 2 If a loan is taken with total annual payments of $10,000/year for 10 years, compare the accumulated interest at the end of the 10 years if the payments are (1) made at the end of each year with discrete yearly interest compounding, (2) made at the end of each week with weekly discrete compounded interest and (3) made continuously with continuous interest compounding. The nominal interest rate, r, is 8%. For (3), the annual payments are assumed to...
1. (a) What is the present worth of $10,000 payments made each year at a nominal interest rate of 6%, compounded semi-annually (i.e., twice per year)? (10 points) i. For a period of 50 years? (2 points) ii. In perpetuity? (2 points) (b) What is the present worth of $10,000 payments made biannually i.e., every two years) at a nominal interest rate of 6%? a) For a period of 50 years? (2 points) b) in perpetuity (2 points)
(b) What is the present worth of $10,000 payments made biannually (i.e., every two years) at a nominal interest rate of 6%? a) For a period of 50 years? (2 points) b) In perpetuity (2 points)
Page 2 of 6 Problem 2 A certain U.S. Treasury bond that matures in 15 years has a $10,000 face value. This means that the bondholder will receive $10,000.00 cash when the bond's maturity date is reached. The bond pays an annual nominal interest of 8% of its face value in semi-annual installments starting at the end of the 1st semi-annual period. a) Draw a cash flow diagram showing bond payments. b) What is its present worth. PW, ifthe prevailing...
Quarter-end payments of $1,590 are made to settle a loan of $35,280 in 8 years. What is the effective interest rate? % Round to two decimal places Raymond leased equipment worth $30,000 for 6 years. If the cost of borrowing is 6.79% compounded semi-annually, calculate the size of the lease payment that is required to be made at the beginning of each half-year. Round to the nearest cent
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2. What is the present worth of a series of equal end-of-quarter payments of $1,500 if the series extends over a period of eight years at 9% interest compounded monthly? (15 points) You are not required to calculate the final answer for this question. You will get full credits with the case number (I/II/III), the complete first three steps, and the last step with the factor equation (in last step clearly showing which factor, what the interest rate is, and...
An perpetuity has continuous payments at a rate of 800 per year. Find the present value of this perpetuity using a nominal rate of interest of 9% compounded continuously. Round your answer to two decimal places.
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