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?

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

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).

A project will cost $1,000 today and will pay back $100 one year from today (t=1),...

A project will cost $1,000 today and will pay back $100 one year from today (t=1), $200 two years from today (t=2), $500 three years from today (t=3) and $1,000 four years from today (t=4). If the required rate of return is 7%, answer question Q1 to Q5. Q1: What is the present value of the future cashflow? a)1578.62 b)1439.19 c)1374.25 d)1664.83 Q2: What is the NPV of the project a)439.19 b)1439.19 c)578.62 d)1374.25 Q3: What is the IRR of...

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.

You are offered an annuity that will pay you $10,000 at the end of each year for 20 years, with the first payment being in 10 years from today.

You are offered an annuity that will pay you $10,000 at the end of each year for 20 years, with the first payment being in 10 years from today. If the interest rate is 12% annually, what is the annuity worth to you today?

You are offered an annuity that will pay you 10,000 at the endof each year...

You are offered an annuity that will pay you 10,000 at the end of each year for 20 years, with the first payment being in 10 years from today. If the interest rate is 12% annually, what is this annuity worth to you today?Martha receives $1000 on the first of each year. Stewart receives $100 on the last day of each year. Both Martha and Stewart will receive payments for 11 years. At an 8% discount rate, what is the...

Assume today is the beginning of year 2011, i.e., January 1, 2011. Company ABC is a...

Assume today is the beginning of year 2011, i.e., January 1, 2011. Company ABC is a hi-tech start-up company that had total after tax earnings of $ 2 million in 2010. Of these, $500,000 were paid out as a dividend to shareholders on December 31, 2010, and the remaining dividends are invested to finance future growth. Company ABC has a total number of 1,000,000 shares outstanding so that the dividend per share is $0.5. ABC’s earnings will grow at a...

1.) FIN3100 is expected to pay a dividend of $3.00 per share one year from today....

1.) FIN3100 is expected to pay a dividend of $3.00 per share one year from today. FIN3100 required rate of return is rs = 7%. If the expected growth rate is 5%, at what price should the stock sell? B.)FIN3100 just paid a dividend of $6.00, i.e., D0 = $6.00. The dividend is expected to grow by 100% during Year 1, by 50% during Year 2, and then at a constant rate of 7% thereafter. If Silva's required rate of...

Consider a stock that will pay a $2 dividend per year for 10 years (from t=1...

Consider a stock that will pay a $2 dividend per year for 10 years (from t=1 till t=10) after which the dividends are expect to increase at the constant growth rate of 3% per year (so, at=11 the dividend will be 2*1.03=$2.06, at t=12 it will be 2.06*1.03, etc. ) and the required return on the stock is 11% Find the stock price today, the capital gain yield during the first year, the dividend yield during the 15th year

Anne purchased an annuity from an insurance company that promised to pay her $35,000 per year...

Anne purchased an annuity from an insurance company that promised to pay her $35,000 per year for the next ten years. Anne paid $236,250 for the annuity, and in exchange she will receive $350,000 over the term of the annuity. a. How much of the first $35,000 payment should Anne include in gross income?(Do not round intermediate calculations.) b.How much income will Anne recognize over the term of the annuity?

My annuity will pay me $4200 a year for 10 years in exchange for $30,000 today....

My annuity will pay me $4200 a year for 10 years in exchange for $30,000 today. What interest rate will you earn on this annuity?

Subjects