PV of Perpetuity
= Periodic Cash Flow/Interest Rate
= 7000/11%
= $63636.36
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FV of an ordinary annuity = 8.11519 8. Calculate the PV of a perpetuity if a....
PV is present value 4. Calculate the PV of an ordinary annuity if a. Periodic cash flow $6,000 per year b. Time frame = 10 years c. Interest rate = 9% per year
= 4.1114 6. Calculate the FV of an ordinary annuity if a. Periodic cash flow = $6,000 per year b. Time frame = 10 years c. Interest rate = 9% per year
Please show the formula and answer in Excel f. Find the PV of an ordinary annuity that pays $1,000 at the end of each of the next 5 years if the interest rate is 15%. Then find the FV of that same annuity. Inputs: PMT = $ 1,000 N = 5 I/YR = 15% PV: Use function wizard (PV) PV = FV: Use function wizard (FV) FV =
Aisha is a pension fund manager. According to her estimates, retirees will be paid benefits worth $800,000 annually 12 years from now. Given a discount rate of 6 percent, what is the present value of the payments today if these annuity payments start at the beginning of the year rather than at the end of each of the next twelve years? An example in the book: PEARSON 4.4 Annuity Due and Perpetuity (continued) Example 4: Annuity Due versus Ordinary Annuity...
Q1 - Describe N,I/Y,PV,PMT, and FV. Q2 – Why is there one negative sign among the last three listed in Q1? Q3 – What is the difference between compounding and discounting? Q4 – What is an annuity? What are the different types of annuities? When are payments made? Q5 – What is a perpetuity? What is the relationship between PV and Interest? Q6 – Does FV get larger or smaller based off monthly compounding compared to quarterly compounding? Q7 –...
4. (a) What is the future value of a 3-year ordinary annuity (recall that ordinary annuities have end of year cash flows) of $200 if the appropriate interest rate is 12%? (1 point) (b) What is the present value of the annuity? (1 point) (c) What would the future and present values be if the annuity were an annuity due (beginning of year cash flows)? Hint, set your calculator to BGN, there is a video in M2 that shows you...
orla 7.2 S-P+I armla 7.34S-P(I +) restated as FV-PV( 1 + ir Fermula S2 Farmals 10.1--1 Formula 11. FV er year 1+i-1 Formula 12.1P-1 Finding the fatare vaie et an ordisary general annuity using the eflective rate of inter est per paryment peried where p ( +i-1 PVr = PMT[I-(1+p)""I Finding the present value of an ordinary general annuity uning the eflective rate ot interest per paymeet period Farmata 12.3 Formula 124 SIZE OF THE NTH PAYMENT Finding the sire...
When calculating a growing perpetuity, the growth rate is expected to continue forever. Therefore it should not exceed... a. the growth rate of the population in the economy. b. the growth rate of productivity in the economy. c. the growth rate of the general economy (growth in real GDP). d. the return on a large portfolio of stocks from the economy. What is the present value of a growing perpetuity with an expected cash flow of 1,000 next year, a...
Q3 Consider the FV and PV of an annuity made up of a series of annual cash payments (starting at the end of year 1). Prove mathematically that the formulae are such that PV=FV/(1+r)^n.
What is the PV of an ordinary annuity with 10 payments of $2.700 if the appropriate interest rate is 6.5%? Select one: O a. $18,439.35 O b. $17,517.38 C. $19,409.84 O d. $16,641.51 O e. $15,809.44