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 1 year ago

Next > < Previous

Related Solutions

9. A 5-year $150 ordinary annuity has an annual interest rate of 8%. What is its...

9. A 5-year $150 ordinary annuity has an annual interest rate of 8%. What is its present value? What would the present value be if it was a 10-year annuity? What would the present value be if this was a perpetuity?

What is the future value of a 14-year ordinary annuity of $450 if the interest rate...

What is the future value of a 14-year ordinary annuity of $450 if the interest rate is 6%? Q11b – What is the present value of the annuity? Hint: Solve for PV. Q11c – What is the future value and present value if the annuity were an annuity due? Solve.

What is the future value of a 5-year ordinary annuity of $1000 if the appropriate interest...

What is the future value of a 5-year ordinary annuity of $1000 if the appropriate interest rate is 5%? What is the present value of the annuity? What is the future value of $1000 after 4 years under 10% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 5%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?

Suppose the present vaule of a 5 year ordinary annuity is $528, if the discount rate...

Suppose the present vaule of a 5 year ordinary annuity is $528, if the discount rate is 14%, what must the annual cash flow be?

What is the future value of a five-year ordinary annuity of $1,000 per year if the interest rate is 4.30%? Hint: solve for year 5.

Question 10 What is the future value of a five-year ordinary annuity of $1,000 per year if the interest rate is 4.30%? Hint: solve for year 5. Question 11 What is the present value of a perpetuity that offers to pay $100 next year and every year after the payment grows at 4.9%. Investments with similar risk are offering an 8% annual return.

What is the future value of a 5-year ordinary annuity with annual payments of $339, evaluated...

What is the future value of a 5-year ordinary annuity with annual payments of $339, evaluated at a 10 percent interest rate? (Do not include the dollar sign ($), and round your answer to 2 decimal places: for example, 536.34)

What's the future value of a 4%, 5-year ordinary annuity thatpays $700 each year? If...

What's the future value of a 4%, 5-year ordinary annuity that pays $700 each year? If this was an annuity due, what would its future value be? Do not round intermediate calculations. Round your answers to the nearest cent.Future Value of an Ordinary Annuity: $ Future Value of an Annuity Due: $

What is the present value of a $100-payment, 100-year annuity due if the interest rate is...

What is the present value of a $100-payment, 100-year annuity due if the interest rate is 14% per year? What is the future value of a $50-payment, 50-year annuity due if the interest rate is 9% per year?

A 50-year annuity with an annual interest rate of 8%. In the first 20 years, $1000...

A 50-year annuity with an annual interest rate of 8%. In the first 20 years, $1000 was deposited at the beginning of each year, and in the next 30 years, $1400 was deposited at the beginning of each year. Calculate the value of this annuity at the end of the 40th year.

FUTURE VALUE: ANNUITY VERSUS ANNUITY DUE What's the future value of a 6%, 5-year ordinary annuity...

FUTURE VALUE: ANNUITY VERSUS ANNUITY DUE What's the future value of a 6%, 5-year ordinary annuity that pays $200 each year? Round your answer to the nearest cent. $ If this was an annuity due, what would its future value be? Round your answer to the nearest cent. $

Subjects