A certain perpetuity pays the holder $300 per month. If the money is invested at a rate of 4% annually (compounded cont...

Question

Question

A certain perpetuity pays the holder $300 per month. If the money is invested at a rate of 4% annually (compounded continuous

Answer 1

Answer #1

Present value of perpetuity = $300 / 0.04

Present value of perpetuity = $7,500

Answer 2

Similar Homework Help Questions

A government bond is offered that pays 3% annually to the holder indefinitely. If the income received is invested at 4....

A government bond is offered that pays 3% annually to the holder indefinitely. If the income received is invested at 4.8% interest (compounded continuously), what is the present value of a $10,000 bond? (Round your answer to two decimal places.)
9. An investment will generate $3100 per year in perpetuity. If the money is dispensed continuously...

9. An investment will generate $3100 per year in perpetuity. If the money is dispensed continuously throughout the year and if the prevailing annual interest rate remains fixed at 4% compounded continuously, what is the present value of the investment? Round the answer to two decimal places. State the answer in a complete sentence. 9. An investment will generate $3100 per year in perpetuity. If the money is dispensed continuously throughout the year and if the prevailing annual interest rate...
An investment pays 5% interest compounded continuously. If money is invested steadily at the rate of...

An investment pays 5% interest compounded continuously. If money is invested steadily at the rate of $14,000, how much time is required until the value of the investment reaches $140,000? The amount of time required is approximately years. (Type an integer or decimal rounded to the nearest hundredth as needed.)

An annuity pays $1200 per year for 15 years. The money is invested at 5.2% compounded...

An annuity pays $1200 per year for 15 years. The money is invested at 5.2% compounded annually. The first payment is made 1 year after the purchase of the annuity. Determine the interest earned by the annuity over the 15 years.
Suppose that you have invested in a perpetuity that pays $500 per year. Now, you forecast...

Suppose that you have invested in a perpetuity that pays $500 per year. Now, you forecast that the interest rate for the first 50 years to be 5%, but the interest rate will rise to 10% after the year 50. What’s the present value of this perpetuity with this information? Give me the specific explanation plz
Exercise 6. What is the effective rate for money invested at 6.2% compounded quaterly? And if...

Exercise 6. What is the effective rate for money invested at 6.2% compounded quaterly? And if it is invested at 5% compounded continuously?

Compounded Continuously 1. How much money will be in the account after 5 years if $2030...

Compounded Continuously 1. How much money will be in the account after 5 years if $2030 is deposited at 4% compounded continuously? 2. Determine the amount of interest earned in 5 years if $2030 is deposited at 4% compounded continuously? 3. Inflation is running at 0.8% per month when you deposit $3000 in an account earning 6% compounded continuously. In constant dollars, how much will you have 2 years from now? 4. Find the present value of $12,075 if money...
Problem #4: A perpetuity pays $3900 at the end of every month for 11 months of...

Problem #4: A perpetuity pays $3900 at the end of every month for 11 months of each year. At the end of the 12th month of each year, it pays double that amount. If the effective ANNUAL rate is 10.5%, what is the present value of this perpetual annuity? Problem #4: Answer correct to 2 decimals.
What is the APY for money invested at each rate? (A) 14% compounded quarterly (B) 13%...

What is the APY for money invested at each rate? (A) 14% compounded quarterly (B) 13% compounded continuously % (Round to three decimal places as needed.) (A) APY

An perpetuity has continuous payments at a rate of 800 per year. Find the present value...

An perpetuity has continuous payments at a rate of 800 per year. Find the present value of this perpetuity using a nominal rate of interest of 9% compounded continuously. Round your answer to two decimal places.