Homework Answers
V is the discount factor.
Whenever we use annuity formula , it gives the present value of all associated cash flows one time period before the first cash flow.
In the given problem , decreasing annuity starts after the 10 year and the first decreased amount is received at the end of the 11th year.So , when we use the decreasing annuity formula , it gives the present value of all cash flows at the end of the 10th year.Hence , it needs to be discounted back more for 10 years in order to have the present value today.
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what is v and why do i need to multiply it by the decreasing
annuity?
5....
An annuity-immediate pays 40 per year for 10 years, then decreases by 2 per year for...
An annuity-immediate pays 40 per year for 10 years, then decreases by 2 per year for 9 years. At an annual effective interest rate of 6%, the present value is equal to X. Calculate X.
An annuity-immediate pays 40 per year for 10 years, then decreases by 2 per year for...
An annuity-immediate pays 40 per year for 10 years, then decreases by 2 per year for 9 years. At an annual effective interest rate of 6%, the present value is equal to X. Calculate X.
9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date,...
9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date, Jenny buys a perpetuity-immediate with annual payments. For the first 11 years, payments are 1,2,3,..., 11. After year 11, payments remain constant at 11. At an annual effective interest rate of i, both annuities have a present value of X. Calculate X. 9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date, Jenny buys a perpetuity-immediate with annual...
Two annuities have equal present values. The first is an annuity-immediate with quarterly payments of $X...
Two annuities have equal present values. The first is an annuity-immediate with quarterly payments of $X for 10 years. The second is an increasing annuity-immediate with 10 annual payments, where the first payment is $500 and subsequent payments increase by 10% per year. Find X if the annual effective interest rate is 5%. (Answer: 188.28)
why do we have to multiply the futuce value of the annuity twice? i understand how...
why do we have to multiply the futuce value of the annuity
twice? i understand how they got up to 5,095 times the future value
of the annuity but am lost after that.
4. An insurance company has an obligation to pay medical bills for a claimant. Average annual claims costs today are $5,000, and medical inflation is expected to be 7% per year. The claimant is expected to live an additional 20 years. Claim payments are made at yearly...
why do we have to multiply the futuce value of the annuity twice? i understand how they got up to 5,095 times the futur...
why do we have to multiply the futuce value of the annuity
twice? i understand how they got up to 5,095 times the future value
of the annuity but am lost after that.
4. An insurance company has an obligation to pay medical bills for a claimant. Average annual claims costs today are $5,000, and medical inflation is expected to be 7% per year. The claimant is expected to live an additional 20 years. Claim payments are made at yearly...
11-16 I need help quick 9. You are offered an annuity that will pay $24,000 per...
11-16 I need help quick
9. You are offered an annuity that will pay $24,000 per year for 11 years (the first payment will occur one year from today). If you feel that the appropriate discount rate is 13%, what is the annuity worth to you today? AnnPay - 24,000 DR = 13 S 134PMT -24,00 world tried It Yrs 86-59 CK NO 1 FV-O Current value of annuity in 136,486.59 10. If you deposit $16,000 per year for 12...
Please show the work/formulas. Problem 26.30 | 3.570 At an annual effective interest rate of i,...
Please show the work/formulas.
Problem 26.30 | 3.570 At an annual effective interest rate of i, the present value of a perpetuity- immediate starting with a payment of 200 in the first year and increasing by 50 each year thereafter is 46,530. Calculate i. Problem 27.1 1825.596 A 20 year increasing annuity due pays 100 at the start of year 1, 105 at the start of year 2, 110 at the start of year 3, etc. In other words, each...
ASSESSMENT 5. You want to buy a condo 5 years from now, and you plan to...
ASSESSMENT 5. You want to buy a condo 5 years from now, and you plan to save $3,000 per year, beginningat the end of each year. You will make 5 deposits in an account that pays 6 % interest. Under these assumptions, how much will you have 5 years from today? a. $16,110,34 b. $16,911.28 c. $17,513.68 d. $15,976.84 e. $18,349.15 6. You have the opportunity to buy a perpetuity that pays $1,000 annually. Your required rate of return on...
1.Future Value: Ordinary Annuity versus Annuity Due What is the future value of a 3%, 5-year...
1.Future Value: Ordinary Annuity versus Annuity Due What is the future value of a 3%, 5-year ordinary annuity that pays $250 each year? Round your answer to the nearest cent. $ If this were an annuity due, what would its future value be? Round your answer to the nearest cent. $ 2. Present and Future Value of an Uneven Cash Flow Stream An investment will pay $100 at the end of each of the next 3 years, $400 at the...
An annuity-immediate pays 40 per year for 10 years, then decreases by 2 per year for 9 years. At an annual effective interest rate of 6%, the present value is equal to X. Calculate X.
An annuity-immediate pays 40 per year for 10 years, then decreases by 2 per year for 9 years. At an annual effective interest rate of 6%, the present value is equal to X. Calculate X.
9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date, Jenny buys a perpetuity-immediate with annual payments. For the first 11 years, payments are 1,2,3,..., 11. After year 11, payments remain constant at 11. At an annual effective interest rate of i, both annuities have a present value of X. Calculate X. 9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date, Jenny buys a perpetuity-immediate with annual...
why do we have to multiply the futuce value of the annuity
twice? i understand how they got up to 5,095 times the future value
of the annuity but am lost after that.
4. An insurance company has an obligation to pay medical bills for a claimant. Average annual claims costs today are $5,000, and medical inflation is expected to be 7% per year. The claimant is expected to live an additional 20 years. Claim payments are made at yearly...
why do we have to multiply the futuce value of the annuity
twice? i understand how they got up to 5,095 times the future value
of the annuity but am lost after that.
4. An insurance company has an obligation to pay medical bills for a claimant. Average annual claims costs today are $5,000, and medical inflation is expected to be 7% per year. The claimant is expected to live an additional 20 years. Claim payments are made at yearly...
11-16 I need help quick
9. You are offered an annuity that will pay $24,000 per year for 11 years (the first payment will occur one year from today). If you feel that the appropriate discount rate is 13%, what is the annuity worth to you today? AnnPay - 24,000 DR = 13 S 134PMT -24,00 world tried It Yrs 86-59 CK NO 1 FV-O Current value of annuity in 136,486.59 10. If you deposit $16,000 per year for 12...
Please show the work/formulas.
Problem 26.30 | 3.570 At an annual effective interest rate of i, the present value of a perpetuity- immediate starting with a payment of 200 in the first year and increasing by 50 each year thereafter is 46,530. Calculate i. Problem 27.1 1825.596 A 20 year increasing annuity due pays 100 at the start of year 1, 105 at the start of year 2, 110 at the start of year 3, etc. In other words, each...
ASSESSMENT 5. You want to buy a condo 5 years from now, and you plan to save $3,000 per year, beginningat the end of each year. You will make 5 deposits in an account that pays 6 % interest. Under these assumptions, how much will you have 5 years from today? a. $16,110,34 b. $16,911.28 c. $17,513.68 d. $15,976.84 e. $18,349.15 6. You have the opportunity to buy a perpetuity that pays $1,000 annually. Your required rate of return on...
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