When calculating a growing perpetuity, the growth rate is expected to continue forever. Therefore it should...
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 growth rate of 3% and a discount rate of 8%?
|
a. |
$12,500.00 |
|
|
b. |
$20,000.00 |
|
|
c. |
$33,333.33 |
|
|
d. |
$10,000.00 |
The present value of an annuity due with 10 payments of $3,000 and a discount rate of 9% is...
|
a. |
$19,252.97 |
|
|
b. |
$18,985.74 |
|
|
c. |
$22,252.97 |
|
|
d. |
$20,985.74 |
When comparing an annuity with a PV of $25,000 and an annuity due with a PV of $25,000 assuming both have the same number of payments and have the same discount rate, which of the following is true?
|
a. |
The FV of the annuity due would be greater than the FV of the annuity. |
|
|
b. |
The FV of the annuity would be greater than the FV of the annuity due. |
|
|
c. |
The payment on the annuity due will be greater than the payment on the annuity. |
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|
d. |
The payment on the annuity will be greater than the payment on the annuity due. |
|
What is the Future Value of $5000 placed in the bank today and receiving 6% annual interest for 10 years?
|
a. |
$8,732.49 |
|
|
b. |
$9,030.56 |
|
|
c. |
$8,857,81 |
|
|
d. |
$8,954.24 |
Homework Answers
Hello Sir/ Mam
We are most delighted to answer, but I'ld like to request you to limit your questions to one per post as also required by CHEGG STUDENT HONOR CODE. Your cooperation is highly appreciated. Thanks!
However, I'm answering 2 here.
Q - 1 - YOUR ANSWER IS OPTION C : GDP
Because if the growth rate of company is greater than the growth rate of GDP, and it continues forever, theoretically, the company will be bigger than the economy one day, which is not possible.
Q - 2- OPTION B : $20,000
It will be equal to 1000/(8%-3%)
I hope this solves your doubt.
Feel free to comment if you still have any query or need something else. I'll help asap.
Do give a thumbs up if you find this helpful.
Add Answer to:
When calculating a growing perpetuity, the growth rate is
expected to continue forever. Therefore it should...
Question 13 (3 points) Consider a growing perpetuity that will pay $300 in one year. Each...
Question 13 (3 points) Consider a growing perpetuity that will pay $300 in one year. Each year after that, you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment. This pattern of payments will continue forever. If the interest rate (discount rate) buyers of the perpetuity require is 15%, then the value of this perpetuity is closest to: Format $1,234 as 1234 Your Answer: Answer Question 14 (3 points) Nielson...
The PV of a 8 annual-payment growing annuity is $89,719.63. The first payment of the growing...
The PV of a 8 annual-payment growing annuity is $89,719.63. The first payment of the growing annuity is $12,000 due one year from now. Subsequent annual payments are expected to grow at an annual rate identical to the effective annual interest rate. What is the annual growth rate?
It is January 1, 2019. Find the present value of a $100 perpetuity when the first...
It is January 1, 2019. Find the present value of a $100 perpetuity when the first payment is at the end of year 2019. The discount rate is 6%. It is January 1, 2019. Find the present value of a $100 perpetuity when the first payment is at the end of year 2020. The discount rate is 6%. It is January 1, 2019. Find the present value of a $100 growing perpetuity when the first payment is at the end...
Problem 6.18 You are evaluating a growing perpetuity investment from a large financial services firm. The...
Problem 6.18 You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $20,100 at the end of this year and subsequent payments that will grow at a rate of 3.4 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.) Present value
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises...
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $20,100 at the end of this year and subsequent payments that will grow at a rate of 3.4 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.)
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises...
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $15,000 at the end of this year and subsequent payments that will grow at a rate of 3.2 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.)
23. An ordinary annuity is best defined as: A) increasing payments paid for a definitive period o...
23. An ordinary annuity is best defined as: A) increasing payments paid for a definitive period of time. B) increasing payments paid forever C) equal payments paid at the end of regular intervals over a stated time period. D) equal payments paid at the beginning of regular intervals for a limited time period. E) equal payments that occur at set intervals for an unlimited period of time 24. A perpetuity is defined as: A) a limited number of equal payments...
You agree to deposit $500 at the beginning of each month into a bank account for...
You agree to deposit $500 at the beginning of each month into a
bank account for the next 24 months. At the end of the 24th month,
you will have $13,000 in your account. If the bank compounds
interest monthly, what annual interest rate will you have
earned?
Note: Only use the formula listed and show the steps of how you
reached the answer, I don't need to know just the answer, I'm
trying to learn. Thank you. Don't use...
You agree to deposit $500 at the beginning of each month into a bank account for...
You agree to deposit $500 at the beginning of each month into a
bank account for the next 24 months. At the end of the 24th month,
you will have $13,000 in your account. If the bank compounds
interest monthly, what annual interest rate will you have
earned?
Note: Please post the formula used to solve the question and
list the steps taken to reach the answer, please don't use excel. I
provided a list of formulas, please state the...
please explain the ubderlined step and include the formula used to get there 3. A perpetuity-immediate...
please explain the ubderlined step and include the formula
used to get there
3. A perpetuity-immediate pays 100 per year. Immediately after the fifth payment, the perpetuity is exchanged for a 25-year annuity-immediate that will pay X at the end of the first year. Each subsequent annual payment will be 8% greater than the preceding payment. The annual effective rate of interest is 8%. Calculate X. (A) 54 (B) 64 (C) 74 (D) 84 (E) 94 PV = 100 w...
Question 13 (3 points) Consider a growing perpetuity that will pay $300 in one year. Each year after that, you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment. This pattern of payments will continue forever. If the interest rate (discount rate) buyers of the perpetuity require is 15%, then the value of this perpetuity is closest to: Format $1,234 as 1234 Your Answer: Answer Question 14 (3 points) Nielson...
Problem 6.18 You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $20,100 at the end of this year and subsequent payments that will grow at a rate of 3.4 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.) Present value
23. An ordinary annuity is best defined as: A) increasing payments paid for a definitive period of time. B) increasing payments paid forever C) equal payments paid at the end of regular intervals over a stated time period. D) equal payments paid at the beginning of regular intervals for a limited time period. E) equal payments that occur at set intervals for an unlimited period of time 24. A perpetuity is defined as: A) a limited number of equal payments...
You agree to deposit $500 at the beginning of each month into a
bank account for the next 24 months. At the end of the 24th month,
you will have $13,000 in your account. If the bank compounds
interest monthly, what annual interest rate will you have
earned?
Note: Only use the formula listed and show the steps of how you
reached the answer, I don't need to know just the answer, I'm
trying to learn. Thank you. Don't use...
You agree to deposit $500 at the beginning of each month into a
bank account for the next 24 months. At the end of the 24th month,
you will have $13,000 in your account. If the bank compounds
interest monthly, what annual interest rate will you have
earned?
Note: Please post the formula used to solve the question and
list the steps taken to reach the answer, please don't use excel. I
provided a list of formulas, please state the...
please explain the ubderlined step and include the formula
used to get there
3. A perpetuity-immediate pays 100 per year. Immediately after the fifth payment, the perpetuity is exchanged for a 25-year annuity-immediate that will pay X at the end of the first year. Each subsequent annual payment will be 8% greater than the preceding payment. The annual effective rate of interest is 8%. Calculate X. (A) 54 (B) 64 (C) 74 (D) 84 (E) 94 PV = 100 w...
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