Homework Answers
Rate of return=Annual cash flows/Present value
=11100/347,000
which is equal to
=3.2%(Approx).
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You just paid $347,000 for a perpetuity that will pay you and your heirs $11,100 a...
2. You just paid $750,000 for a perpetuity that will pay you and your heirs $42,000...
2. You just paid $750,000 for a perpetuity that will pay you and your heirs $42,000 a year forever. What rate of return are you earning on this policy?
Your grandparents would like to establish a trust fund that will pay you and your heirs...
Your grandparents would like to establish a trust fund that will pay you and your heirs $170,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 3.3 percent, how much must your grandparents deposit today? Multiple Choice O $5,887,445.89 54292,929.29 C) $4755,244.76 54,507,575.76
You are willing to pay $30,000 now to purchase a perpetuity that will pay you and...
You are willing to pay $30,000 now to purchase a perpetuity that will pay you and your heirs $1,200 each year, forever, starting at the end of this year. If your required rate of return does not change, how much would you be willing to pay if this were a 30-year annual payment, ordinary annuity instead of perpetuity?
your grandparents would like to establish a trust fund that will pay you and your heirs...
your grandparents would like to establish a trust fund that will pay you and your heirs 145000 per year forever with the first payment one year from today. if the trust fund earns an annual return of 2.8 percent how much must your grandparents deposit today
Your grandparents would like to establish a trust fund that will pay you and your heirs $160,000 per year forever with t...
Your grandparents would like to establish a trust fund that will pay you and your heirs $160,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 3.1 percent, how much must your grandparents deposit today?
Problem 6-10 Calculating Perpetuity Values [LO1] The Maybe Pay Life Insurance Co. is trying to sell...
Problem 6-10 Calculating Perpetuity Values [LO1] The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $26,000 per year forever. If the required return on this investment is 5.3 percent, how much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Suppose you inherit a perpetuity that will pay you $10,000 a year for the rest of...
Suppose you inherit a perpetuity that will pay you $10,000 a year for the rest of your life. You will receive the first $10,000 payment exactly three years from today. The interest rate is 5%. What is the perpetuity worth at the moment you start collecting payments (three years from now) What is the perpetuity worth now? A bank offers to exchange your perpetuity for another stream of yearly payments that also lasts forever but whose first payment will be made...
10A) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that...
10A) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30233 per year forever. If the required return on this investment is 8 percent, how much will you pay for the policy? 10B) The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $27437 per year forever. Suppose a sales associate told you the policy costs $501647....
Larry's Life Insurance Co. is trying to sell you an investment policy that will pay you...
Larry's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. Assume the required return on this investment is 7.9 percent How much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Policy value today
If you are willing to pay $46,850.00 today to receive $4,341.00 per year forever then your...
If you are willing to pay $46,850.00 today to receive $4,341.00 per year forever then your required rate of return must be ____%. Assume the first payment is received one year from today. If you are willing to pay $20,509.00 today to receive a perpetuity with the first payment occurring next year then the payment must be $______. Assume a 7.00% discount rate. What discount rate would make you indifferent between receiving $3,727.00 per year forever and $5,271.00 per year...
Your grandparents would like to establish a trust fund that will pay you and your heirs $170,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 3.3 percent, how much must your grandparents deposit today? Multiple Choice O $5,887,445.89 54292,929.29 C) $4755,244.76 54,507,575.76
Larry's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. Assume the required return on this investment is 7.9 percent How much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Policy value today
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