How much would you be willing to pay for a 10-year ordinary annuity if the payments...

How much would you be willing to pay for a 10-year ordinary annuity if the payments are $500 per year and the interest rate is 6.25% compounded annually ?

Solutions

Expert Solution

SOLUTION :

given data

payments = $500 / year

interest rate = 6.25%

by using annuity table

we have 7.36 for 6 % at 10 years

and 7.02 for 7%

then by interpolating the two values we have 6.25% = 7.275

= 500 * 7.275

= 3637.5

annuity table :

for your understanding i have uploded the annuity table

if u have any doubts plz comment . if u like the answer plz give a thumb up ..thanq...

keosha answered 1 month ago

Next > < Previous

Related Solutions

(Amount of an ordinary annuity) How much must you pay at the end of each year...

(Amount of an ordinary annuity) How much must you pay at the end of each year to repay a $50,000, 14% annual interest rate loan if you must make: Using excel a. 10 payments? b. 15 payments? c. 20 payments? d. 30 payments?

How much would you be willing to pay for an investment that will pay you and...

How much would you be willing to pay for an investment that will pay you and your heirs $16,000 each year in perpetuity if the first payment is to be received in 9 years? a) Assuming your opportunity cost is 6%? b) if you want the payments to grow by 2% indefinitely. problem must be in excel

How much would you be willing to pay today for an investment that promises to pay...

How much would you be willing to pay today for an investment that promises to pay you pay $26,000 in 35 years if your required return on the investment is 9% per year?

What is the PV of an ordinary annuity with 10 payments of $67,450 if the appropriate...

What is the PV of an ordinary annuity with 10 payments of $67,450 if the appropriate interest rate is 71 percent? 7.1 percent

what is the pv of an ordinary annuity with 10 payments of 4100 if the appropriate...

what is the pv of an ordinary annuity with 10 payments of 4100 if the appropriate interest rate is 5%? Your aunt is about to retire, and she wants to sell some of her stock and buy an annuity that will provide her with income of $53000 per year for 30 years, beginning a year from today. The going rate on such annuities is 7%. How much would it cost her to buy such an annuity today? What's the present...

14. An example of an ordinary annuity would be a. Dinner at McDonald’s in which you pay...

14. An example of an ordinary annuity would be a. Dinner at McDonald’s in which you pay for your food before you receive it. b. Your rent, which you pay on the first of the month. c. Admission to a movie, where you pay before seeing the movie. d. Your “A” grade which you receive after working hard all semester. e. None of the above. 15. Ben has computed the value of a stock to be $69.32 using the things he learned in BA3500. His stock...

____20.What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate...

____20.What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 6.5%? a. $15,809.44 b. $16,641.51 c. $17,517.38 d. $18,439.35 e. $19,409.84 ____21.Your aunt is about to retire, and she wants to buy an annuity that will supplement her income by $65,000 per year for 25 years, beginning a year from today. The going rate on such annuities is 6.25%. How much would it cost her to buy such an annuity today?...

Survey at least 5 students asking them how much they would be willing to pay for...

Survey at least 5 students asking them how much they would be willing to pay for one visit to their favorite beach. What are some of the qualifying questions you would include in your survey in order to determine their WTP values?

An online survey asked 397 how much extra in taxes they would be willing to pay...

An online survey asked 397 how much extra in taxes they would be willing to pay to protect the environment. The sample average was $599 with a sample standard deviation of $180. Is it appropriate to use a normal distribution to approximate a confidence interval for the population mean? If it’s inappropriate, indicate why. Select one: a. Yes. b. No, because it was not a random sample. c. No, because n(p-hat) < 10 or n(q-hat) < 10. d. No, because...

You purchase a 10 year annuity with payments at the end of each year for $10,...

You purchase a 10 year annuity with payments at the end of each year for $10, 000 (where for this annuity effective annual interest is 4%). Immediately after you receive payments, you deposit the payment into an account earning 5% effective annual interest. How much is in this account at the end of 10 years? Use this to find the equivalent effective annual interest rate for this $10, 000 investment over this 10 year period.

Subjects