Question
In: Advanced Math
Perpetuity A pays $100 at the end of each year. Perpetuity B pays $25 at the end of each quarter.
Perpetuity A pays $100 at the end of each year. Perpetuity B pays $25 at the end of each quarter. The present value of perpetuity A at the effective rate of interest is $2,000.
What is the present value of perpetuity B at the same annual effective rate of interest i?
Solutions
Colby Messinger answered 2 years agoRelated Solutions
A perpetuity pays $1000 at the end of every month for 11 months of each year....
A perpetuity pays $1000 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 10.4%, what is
the present value of this perpetual annuity?
If we assume a perpetuity pays $100 per year forever. What would the perpetuity be worth...
If we assume a perpetuity pays $100 per year forever. What would
the perpetuity be worth if the required rate of return is 5%?
$100
$500
$1,000
$2,000
A perpetuity costs 693.16 and makes end-of-month payments. The perpetuity pays 1 at the end of...
A perpetuity costs 693.16 and makes end-of-month payments. The
perpetuity pays 1 at the end of each month of year 1, 2 at the end
of each month of year 2, ...., 10 at the end of each month of year
10. After year 10, the payments remain constant at 10. Calculate
the annual effective interest rate.
(a) 8.30%
(b) 9.38%
(c) 10.47%
(d) 11.57%
(e) 12.68%
A perpetuity costs 693.16 and makes end-of-month payments. The perpetuity pays 1 at the end of...
A perpetuity costs 693.16 and makes end-of-month payments. The
perpetuity pays 1 at the end of each month of year 1, 2 at the end
of each month of year 2, ...., 10 at the end of each month of year
10. After year 10, the payments remain constant at 10. Calculate
the annual effective interest rate.
(a) 8.30% (b) 9.38% (c) 10.47% (d) 11.57% (e) 12.68%
The present value of a constant growth perpetuity is $100. If the perpetuity pays $5 next...
The present value of a constant growth perpetuity is $100. If
the perpetuity pays $5 next year and the discount rate is 10%, by
what rate is the perpetuity growing?
Gustav owns a perpetuity which pays 200 per year starting at the end of year 2....
Gustav owns a perpetuity which pays 200 per year starting at the
end of year 2. Ingrid owns a perpetuity that pays deposits X at the
end of each 6 months, beginning 6 months from now. Assume a nominal
annual interest rate of 8%. For what value of X is the present
value of the two perpetuities equal.
What is the present value of annuity that pays $200 at the end of each quarter...
What is the present value of annuity that pays $200 at the end
of each quarter of a 10-year term if the interest rate is 5%? a.
$3,256.39 b. $4,256.39 c. $5,256.39 d. $6,256.39 e. None of the
above.
1. Consider a perpetuity that pays $100 per year. The market rate of interest is 10%....
1. Consider a perpetuity that pays $100 per year. The market
rate of interest is 10%.
a. What is the PV of the perpetuity?
b. What is the PV of the perpetuity three years from now?
c. What is the present value of the perpetuity "n" years from
now?
d. Under what circumstances does the value of a perpetuity
change?
A perpetuity makes payments at the end of each year at an annual effective rate of...
A perpetuity makes payments at the end of each year at an annual
effective rate of
3.4%. The payment pattern is 3,2,1 (at the end of years 1, 2 and 3)
and this pattern repeats for the
balance of the perpetuity. Calculate the present value of the
perpetuity at the beginning of the rst
year. Please show all work.
B. A series of 25 end-of-year deposits beginning with $1135 at the end of year 1...
B. A series of 25 end-of-year deposits beginning with $1135 at
the end of year 1 and increasing by $260 per year with a 6%
interest rate. What Uniform Series of deposits would result in the
same cumulative balance? $
C. John makes 35 end-of-year deposits into a retirement account
that returns 5.0.% per year compounded annually. His first deposit
is $7500 and he increases the deposits by 8.9% each year. How much
will be in the account immediately following...
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