Q36: Megan purchases a perpetuity-immediate for 3250 with annual payments of 130. At the same price...
Q36:
Megan purchases a perpetuity-immediate for 3250 with annual payments of 130. At the same price and interest rate, Chris purchases an annuity-immediate with 20 annual payments that begin at amount P and increase by 15 (growth) each year thereafter. Calculate P .
Correct answer is: 116
Homework Answers
Present value of perpetuity = Annual payment / Interest
rate
3250 = 130 / Interest rate
Interest rate = 130 / 3250 = 0.04 or 4%
r = 0.04
n = 20
D = 15
(1/r) * (1 - (1 / (1 + r)^n)) = (1/0.04) * (1 -
(1/(1+0.04)^20))
= 25 * (1 - 0.4564)
= 13.5903
PV = 3250 = (P * 13.5903) + (15 * (13.5903 - 20/(1 + 0.04)^20) /
0.04
3250 = (P * 13.5903) + (15 * (13.5903 - 9.1277) / 0.04
3250 = (P * 13.5903) + (15 * (4.4626 / 0.04)
3250 = (P * 13.5903) + 1673.4750
P = (3250 - 1673.4750) / 13.5903
P = 1576.5250 / 13.5903
P = 116
Add Answer to:
Q36:
Megan purchases a perpetuity-immediate for 3250 with annual
payments of 130. At the same price...
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...
the possible answers are 604, 620, 640, 658, 678 17. A family purchases a perpetuity-immediate that...
the possible answers are 604, 620, 640, 658, 678
17. A family purchases a perpetuity-immediate that provides annual payments that decrease by 0.4 % each year. The price of the perpetuity is 10,000 at an annual force of interest of 0.06. Calculate the amount of the perpetuity's first payment.
20. An annuity due that lasts for 30 years has annual payments of 500 at the...
20. An annuity due that lasts for 30 years has annual payments of 500 at the beginning of each year for 15 years, and 1000 at the beginning of each year for the followiing 15 years. A perpetuity due has payments of P each year for 20 years and then annual payments of 2P thereafter. The present values of the annuity and the perpetuity are the same if d = 9%. Find P.
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?
A perpetuity due makes annual payments which begin at $100 for the first year, then increase at 6% per year through the...
A perpetuity due makes annual payments which begin at $100 for the first year, then increase at 6% per year through the 10th year, and then remain level thereafter. Calculate the present value of this perpetuity, if the annual effective rate of interest is equal to 8%.
the possible answers are 16942, 17384, 17434, 17520, 18989 12. Jack inherited a perpetuity-due, with annual...
the possible answers are 16942, 17384, 17434, 17520,
18989
12. Jack inherited a perpetuity-due, with annual payments of 15,000. He immediately exchanged the perpetuity for a 25-year annuity-due having the same present value. The annuity-due has annual payments of X. All the present values are based on an annual effective interest rate of 10% for the first 10 years and 8% thereafter. Calculate X.
5. Samantha buys a 12-year annuity immediate with semi-annual payments for a price X. Payments start...
5. Samantha buys a 12-year annuity immediate with semi-annual payments for a price X. Payments start at 5000, and decrease 500 per payment until they reach 2000, then remain level at that amount for the remainder of the term. The nominal annual interest rate compounded quarterly is 8% Find X
7. The annual annuity stream of payments with the same present va the project's_ - cost....
7. The annual annuity stream of payments with the same present va the project's_ - cost. a. incremental C. d. opportunity equivalent annual 8. A cost that has already been paid, or the liability to pay has already been in a. salvage value expense. b. sunk cost. C. opportunity cost. Samarbrod or bloze d. erosion cost 9. A bond with semi-annual interest payments, all else equal, would be price with annual interest payments. A. higher B. lower C. the same...
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...
Michael is receiving an annuity due with monthly payments for 20 years. Each monthly payment in...
Michael is receiving an annuity due with monthly payments for 20 years. Each monthly payment in the first year is 130. Each monthly payment in the second year is 260. Each monthly payment in the third year is 390. The payments continue to increase in the same pattern until each monthly payment in the 20th year is 2600. Using an annual effective rate of interest of 7%, calculate the present value of this annuity.
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...
the possible answers are 604, 620, 640, 658, 678
17. A family purchases a perpetuity-immediate that provides annual payments that decrease by 0.4 % each year. The price of the perpetuity is 10,000 at an annual force of interest of 0.06. Calculate the amount of the perpetuity's first payment.
20. An annuity due that lasts for 30 years has annual payments of 500 at the beginning of each year for 15 years, and 1000 at the beginning of each year for the followiing 15 years. A perpetuity due has payments of P each year for 20 years and then annual payments of 2P thereafter. The present values of the annuity and the perpetuity are the same if d = 9%. Find P.
the possible answers are 16942, 17384, 17434, 17520,
18989
12. Jack inherited a perpetuity-due, with annual payments of 15,000. He immediately exchanged the perpetuity for a 25-year annuity-due having the same present value. The annuity-due has annual payments of X. All the present values are based on an annual effective interest rate of 10% for the first 10 years and 8% thereafter. Calculate X.
5. Samantha buys a 12-year annuity immediate with semi-annual payments for a price X. Payments start at 5000, and decrease 500 per payment until they reach 2000, then remain level at that amount for the remainder of the term. The nominal annual interest rate compounded quarterly is 8% Find X
7. The annual annuity stream of payments with the same present va the project's_ - cost. a. incremental C. d. opportunity equivalent annual 8. A cost that has already been paid, or the liability to pay has already been in a. salvage value expense. b. sunk cost. C. opportunity cost. Samarbrod or bloze d. erosion cost 9. A bond with semi-annual interest payments, all else equal, would be price with annual interest payments. A. higher B. lower C. the same...
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...
Most questions answered within 3 hours.
-
Industry: Telecommunications in India
Here, you need to discuss the sources of the growth pattern
and...
asked 10 minutes ago -
Hydrobromic acid
dissolves solid iron according to the followiaung reaction:
Fe(s)+2HBr(aq)→
FeBr2(aq)+ H2(g)
Part A. What...
asked 1 hour ago -
Verify the following vector identity in SPHERICAL
COORDINATES.
div(curl(A)) = 0
asked 3 hours ago -
The work function (Φ) for a metal is 7.50×10-19 J.
What is the longest wavelength (nm)...
asked 4 hours ago -
1. Would the following procedural changes cause the
calculated mass percent Ni2+ ion in Ni(NH3)nCl2 to...
asked 5 hours ago -
1. Why does the voltage of the capacitor vary with frequency?
where does this missing voltage...
asked 7 hours ago -
p p please write each step out clearly
3. A manager of a company is considering...
asked 5 hours ago -
On October 1, Ebony Ernst organized Ernst Consulting; on October
3, the owner contributed $83,540 in...
asked 7 hours ago -
A.)As an electron moves through a region of space, its speed
decreases from 9.60 × 106...
asked 7 hours ago -
In java with the netbeans program do:
Through object programming
Create a class "ContadorP", which is...
asked 7 hours ago -
Pattern Corporation acquired all of Science
Company's outstanding stock on January 1, 2016 for $600,000 cash....
asked 7 hours ago -
Here are all accounts Tyler Co. maintains.
Tax expenses $4,750
Common stocks $48,840
SG&A expenses $2,500...
asked 7 hours ago