Calvin just inherited an annuity that promises to pay $50,000 per year for 10 years, beginning...

Calvin just inherited an annuity that promises to pay $50,000 per year for 10 years, beginning 15 years from today. Assuming a required rate of return of 10%, Calculate the present value of the annuity.

Expert Solution

Year	Annuity	PVF at 10%	Present values
1	0	0.909091	0
2	0	0.826446	0
3	0	0.751315	0
4	0	0.683013	0
5	0	0.620921	0
6	0	0.564474	0
7	0	0.513158	0
8	0	0.466507	0
9	0	0.424098	0
10	0	0.385543	0
11	0	0.350494	0
12	0	0.318631	0
13	0	0.289664	0
14	0	0.263331	0
15	50000	0.239392	11969.6
16	50000	0.217629	10881.46
17	50000	0.197845	9892.233
18	50000	0.179859	8992.939
19	50000	0.163508	8175.4
20	50000	0.148644	7432.181
21	50000	0.135131	6756.529
22	50000	0.122846	6142.299
23	50000	0.111678	5583.908
24	50000	0.101526	5076.28
Present value of annuity			80902.83

Value of Annuity today = $ 80902.83

jeff jeffy answered 3 years ago

you inherited an annuity that will pay you $900 per year for 18 years, with the...

you inherited an annuity that will pay you $900 per year for 18 years, with the first payment being made today. would you sell it today if you were offered a price of $11,000 for it? assume interesr rate is 5%

April Stigum will receive a 10-year annuity of $5,000 per year, beginning 5 years from today....

April Stigum will receive a 10-year annuity of $5,000 per year, beginning 5 years from today. In other words, the first payment will be made at the end of year 5. Assuming a required rate of return of 6%, calculate the present value today of her annuity. (Enter a positive value and round to 2 decimals).

Suppose that you have inherited an annuity that will pay $1000 for 50 years. A) Assuming...

Suppose that you have inherited an annuity that will pay $1000 for 50 years. A) Assuming that the first payment occurs exactly one year from now and that the annual opportunity cost of capital is 10% , what is the value of this annuity today? Round your final answer to two decimals. B) Assuming that the first payment occurs immediately and that the annual opportunity cost of capital is 10%, What is the value of this annuity today? Round your...

A salt mine you inherited will pay you $61,000 per year for 25 years, with the...

A salt mine you inherited will pay you $61,000 per year for 25 years, with the first payment being made today. If you think a fair return on the mine is 7.5%, how much should you ask for it if you decide to sell it?

You are offered an annuity investment that will pay you $ 25,000 per year for 10...

You are offered an annuity investment that will pay you $ 25,000 per year for 10 years beginning in 20 years. These payments will be made at the beginning of each year and your discount rate is expected to be 8%. You will need to make payments at the end of each year for the next 20 years (also at 8%) in order to receive the annuity investment. What is the present value of the annuity investment as of...

10. You are offered an annuity that will pay you $200,000 once per year, at the...

10. You are offered an annuity that will pay you $200,000 once per year, at the end of the year, for 25 years. The first payment will arrive one year from now. The last payment will arrive twenty five years from now. Suppose your annual discount rate is ?? = 5.25%, how much are you willing to pay for this annuity? (hint: this is the same as the present value of an annuity.) 11. You would like to develop an...

A 30-year annuity will pay $10,000 per year, beginning a year from today (i.e., t=1). If...

A 30-year annuity will pay $10,000 per year, beginning a year from today (i.e., t=1). If the interest rate is 6% per year, compounded annually, for the first 15 years and 8% per year, compounded annually, for the subsequent 15 years, what is the present value of the annuity at t=0? What is the future value of the annuity at t=30?

Suppose that you have inherited an annuity that will pay $1000 one year from now, A)...

Suppose that you have inherited an annuity that will pay $1000 one year from now, A) And a payment that is 5% larger than the prior payment each of the next 49 years. Assuming that the first payment occurs exactly one year from now and that the annual opportunity cost of capital is 10%, What is the value of this annuity today? Round your final answer to two decimals. B) Each of the following payments will be 5% larger than...

Assume that you own an annuity that will pay you $15,000 per year for 13 years,...

Assume that you own an annuity that will pay you $15,000 per year for 13 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $120,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment? a. 8.25% b. 9.45% c. 10.97% d. 7.78% e. 11.07%

You just purchased an annuity that will pay you $24,000 a year for 25 years, starting today....

You just purchased an annuity that will pay you $24,000 a year for 25 years, starting today. What was the purchase price if the discount rate is 8%? $256,195 $251,409 $245,621 $276,690 $258,319

Question