Consider a geometrically increasing annuity immediate. It's initial payment is $1000, and every following annual payment...

Consider a geometrically increasing annuity immediate. It's initial payment is $1000, and every following annual payment is 1.03 times the payment before it. The annual effective rate is 0.04 over a 10 year term. Find its present value.

Solutions

Expert Solution

Present value = $10486.12.

Please upvote if satisfied

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

An annuity-immediate with 20 annual payments starts with a payment of 300 and each payment thereafter...

An annuity-immediate with 20 annual payments starts with a payment of 300 and each payment thereafter is 25 more than the previous payment. The effective annual interest rate is 5%. Calculate the present value. Be sure to include the appropriate equation or expression of value that you use. Instead of a 20 year annuity-immediate, it is a perpetuity. What would the present value be in that case?

What is the present worth of a geometrically increasing series with a first year payment of...

What is the present worth of a geometrically increasing series with a first year payment of $11,000 increasing at 6% per year for 25 years if the interest rate is 6% compounded annually?

3-year annuity immediate with monthly payments has an initial payment of 200. Subsequent monthly payments are...

3-year annuity immediate with monthly payments has an initial payment of 200. Subsequent monthly payments are x% more than each preceding payment. Given that the amount of the 14th payment is 481.969, determine the present value of the annuity using a 9%, compounded monthly, interest rate.

Strahd bought a 20-year annuity-immediate with payment size 350 at an annual effective rate of 4%....

Strahd bought a 20-year annuity-immediate with payment size 350 at an annual effective rate of 4%. Just after receiving the eighth payment, Strahd’s life forever changed and he sold the remainder of the annuity, reinvesting the proceeds in a level-payment perpetuityimmediate. What is the payment size K of this perpetuity?

A cash flow series is increasing geometrically at the rate of 7% per year. The initial...

A cash flow series is increasing geometrically at the rate of 7% per year. The initial payment at EOY 1 is $5000, with increasing annual payments ending at EOY 20. The interest rate is 17% compounded annually for the first eight years and 5% compounded annually for the remaining 12 years. Find the present amount that is equivalent to this cash flow.

Annuity Plan A has an initial annual payment that starts at $10,000 and grows at 5%...

Annuity Plan A has an initial annual payment that starts at $10,000 and grows at 5% per year. Plan B has a flat payment of $12,500 for the 10 years. a. Which 10 year annuity is better, if the annual r=8%? b. At what discount rate would the annuity owner be indifferent between the two plans?

Strahd bought a 20-year annuity-immediate with payment size 350 atan annual effective rate of 4%....

For 50000, Smith purchases a 36-payment annuity-immediate with monthly payments. Assume an effective annual interest rate...

For 50000, Smith purchases a 36-payment annuity-immediate with monthly payments. Assume an effective annual interest rate of 12.68%. For each of the following cases find the unknown amount X. (a) The first payment is X and each subsequent payment is 50 more than the previous one. (b) The first payment is X and each subsequent payment until the 18th pay- ment (and including the 18th payment) is 0.2% larger than the previous one. After the 18th payment, each subsequent payment...

A bond with a face value of $1000 will pay it's next semi-annual $50 coupon payment...

A bond with a face value of $1000 will pay it's next semi-annual $50 coupon payment in exactly 6-months. What is the price of the bond if it matures in 6 years and the required yield-to-maturity is 14% APR compounded semi-annually?

Dipper has a 10 year increasing annuity immediate that pays $100 at the end of the...

Dipper has a 10 year increasing annuity immediate that pays $100 at the end of the first year, $200 at the end of the second year, ... , and $1000 at the end of the 10th year. He exchanges the annuity for a perpetuity of equal value that pays X at the end of each year. If the effective annual interest rate is 3%, find the value of X

Subjects