Question
In: Finance
A 5-year, $100 ordinary annuity has an annual interest rate of 4%.
A 5-year, $100 ordinary annuity has an annual interest rate of 4%.
1. What is its present value?
2. What would the present value be if it was a 10-year annuity?
3. What would the present value be if it was a 25-year annuity?
4. What would the present value be if this was a perpetuity?
Solutions
Expert Solution
1 ) We are given the following information:
| PMT | $100.00 |
| r | 4.00% |
| n | 5 |
| frequency | 1 |
We need to solve the following equation to arrive at the
required PV
2)We are given the following information:
| PMT | $ 100.00 |
| r | 4.00% |
| n | 10 |
| frequency | 1 |
We need to solve the following equation to arrive at the required PV
3) We are given the following information:
| PMT | $ 100.00 |
| r | 4.00% |
| n | 25 |
| frequency | 1 |
We need to solve the following equation to arrive at the required PV
4) PV for a perpetuity is calculated by solving the following equation:
jeff jeffy answered 2 years agoRelated Solutions
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