finance
An increasing perpetuity makes payments of $2, $4, $6, · · · . The payments are made at the end of every two years. The present value of the perpetuity is $220. Determine the annual effective interest rate
Homework Answers
Formula:
PV of Growing Perpetuity = P1 / (r – g)
Where P = Payment at period 1
r = discount rate
g = growth rate
Given growing perpetuity is $2, $4, $6……
Since the payments are made at the end of every two year
Growing perpetuity is $6, $14, $22, $30……
Consider two year as 1 Period
PV of Growing Perpetuity = P1 / (r – g)
$220 = $6 / (r-0.7)
R = 6.5%
Please show the work/formulas. Problem 26.30 | 3.570 At an annual effective interest rate of i,...
Please show the work/formulas.
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Spring 2019 Chapter 2: Annuities MAT 3541 Part D Basic problems 1. A perpetuity has payments of w, w, 2w, 2w, 3w, 3w,.. with payments made at the end of each year. The present value using an annual effective interest rate of 10% of this perpetuity is equal to the present value of the geometrically increasing perpetuity with initial payment w and each subsequent payment increasing by a factor of 1+r. Calculate r. [Ans. 0.0826]
QUESTION 6 John receives a perpetuity making payments using the following scheme: The first payment will...
QUESTION 6 John receives a perpetuity making payments using the following scheme: The first payment will be for 2 at the end of the 5" year The remaining payments will occur every three years, following the first payment Each subsequent payment will be X% larger than the previous payment The present value of this perpetuity at an annual effective interest rate of 10% is equal to 25. Calculate X. Give your answer rounded to two decimal places.
Can someone please help with this question? Also, attached there is an example. In the example...
Can someone please help with this question?
Also, attached there is an example. In the example problem I
did box in yellow what I dont understand.
Question 5 QUESTION 1 pts 5. You are given a perpetuity, with annual payments as follows: EXAMPLE (1) Payments of 4 at the end of the first year and every three years thereafter. (ii) Payments of 5 at the end of the second year and every three years thereafter. (iii) Payments of 2 at...
A perpetuity has payments of 1, 1, 2, 1, 1, 3, 1, 1, 4,... Payments are...
A perpetuity has payments of 1, 1, 2, 1, 1, 3, 1, 1, 4,... Payments are made at the end of each year. Assuming an annual effective interest rate of 5%, find the present value of the perpetuity. Α. 440
an increasing perpetuity immediate makes annual payments. the first payment is 100 and each subsequent payment...
an increasing perpetuity immediate makes annual payments. the first payment is 100 and each subsequent payment is larger than the preceding payment by an amount X. based on an annual effective interest rate of 10%, the present value of the perpetuity at time 0 is one half of its present value at time 20. what is rhe value of x?
(1 point) Payments under a continuous perpetuity are made at the periodic rate of 1.03' at time t...
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(1 point) Payments under a continuous perpetuity are made at the periodic rate of 1.03' at time t. The annual effective rate of interest is 0.12. Find the present value of the perpetuity. ANSWER-
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(1 point) Problem 9 - Annuities with "Off Payments" A perpetuity pays 8000 at the end of every 6 years forever. The nominal annual interest rate is 6% compounded monthly. The present value of this perpetuity is PV = ||
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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...
Spring 2019 Chapter 2: Annuities MAT 3541 Part D Basic problems 1. A perpetuity has payments of w, w, 2w, 2w, 3w, 3w,.. with payments made at the end of each year. The present value using an annual effective interest rate of 10% of this perpetuity is equal to the present value of the geometrically increasing perpetuity with initial payment w and each subsequent payment increasing by a factor of 1+r. Calculate r. [Ans. 0.0826]
QUESTION 6 John receives a perpetuity making payments using the following scheme: The first payment will be for 2 at the end of the 5" year The remaining payments will occur every three years, following the first payment Each subsequent payment will be X% larger than the previous payment The present value of this perpetuity at an annual effective interest rate of 10% is equal to 25. Calculate X. Give your answer rounded to two decimal places.
Can someone please help with this question?
Also, attached there is an example. In the example problem I
did box in yellow what I dont understand.
Question 5 QUESTION 1 pts 5. You are given a perpetuity, with annual payments as follows: EXAMPLE (1) Payments of 4 at the end of the first year and every three years thereafter. (ii) Payments of 5 at the end of the second year and every three years thereafter. (iii) Payments of 2 at...
A perpetuity has payments of 1, 1, 2, 1, 1, 3, 1, 1, 4,... Payments are made at the end of each year. Assuming an annual effective interest rate of 5%, find the present value of the perpetuity. Α. 440
(1 point) Payments under a continuous perpetuity are made at the periodic rate of 1.03' at time t. The annual effective rate of interest is 0.12. Find the present value of the perpetuity. ANSWER-
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