For the next 30 years, you will receive annual payments of $10,000/year. The difference in the...

For the next 30 years, you will receive annual payments of $10,000/year. The difference in the present value terms if you receive these payments at the beginning of each year rather than at the end of each year is closest to what value? Assume the discount rate is 6% APR

8150

8300

7850

8000

8450

Expert Solution

Present value of first series:

a	Present value of annuity=	P* [ [1- (1+r)-n ]/r ]

P=	Periodic payment	10,000.00
r=	Rate of interest per period
	Annual interest	6.00%
	Number of payments per year	1
	Interest rate per period	0.06/1=
	Interest rate per period	6.000%

n=	number of periods:
	Number of years	30
	Periods per year	1
	number of payments	30

	Present value of annuity=	10000* [ (1- (1+0.06)^-30)/0.06 ]
	Present value of annuity=	137,648.31

Present value of alternative series:

	Present value of annuity due=	P* [ [1- (1+r)-(n-1) ]/r ] + P


P=	Periodic payment	10,000.00


r=	Rate of interest per period:
	Annual rate of interest	6.00000%
	Frequency of payment	once in every 12 months
	Payments per year	12/ 12=	1
	Interest rate per period	0.06/1=	6.000%

n=	number of payments:
	Number of years	30
	Payments per year	1

	number of payments	30


	Present value of annuity=	10000* [ [1- (1+0.06)^-(30-1)]/0.06 ] +10000

	Present value of annuity=	145,907.21

Difference = 145,907.21 -137,648.31 = 8259

Answer is:

8300

please rate.

jeff jeffy answered 1 year ago

You are scheduled to receive annual payments of $8,500 for each of the next 21 years....

You are scheduled to receive annual payments of $8,500 for each of the next 21 years. The discount rate is 8.0 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

You are scheduled to receive annual payments of $9,600 for each of the next 24 years....

You are scheduled to receive annual payments of $9,600 for each of the next 24 years. The discount rate is 8.0 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year? $9,600.00 $10,368.00 $8,554.57 $9,279.36 $8,086.09

You are scheduled to receive annual payments of $3,600 for each of the next 12 years...

You are scheduled to receive annual payments of $3,600 for each of the next 12 years (you are going to receive the payments at the end of each year). The discount rate is 10 percent. What is the present value of these cash flows? Round the answer to two decimal places.

You are scheduled to receive annual payments of $8,700 for each of the next 23 years....

You are scheduled to receive annual payments of $8,700 for each of the next 23 years. The discount rate is 8.0 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year? a. $7,642.82 b. $8,409.42 c. $9,396.00 d. $8,700.00 e. $7,218.26

You are scheduled to receive annual payments of $8,600 for each of the next 27 years....

You are scheduled to receive annual payments of $8,600 for each of the next 27 years. The discount rate is 7.0 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

A loan of $10,000 is amortized by equal annual payments for 30 years at an effective...

A loan of $10,000 is amortized by equal annual payments for 30 years at an effective annual interest rate of 5%. The income tax rate level is at 25%. Assume the tax on the interest earned is based on the amortization schedule. a) Determine the income tax in the 10th year b) Determine the total income taxes over the life of the loan c) Calculate the present value of the after-tax payments using the before-tax yield rate. Answer to the...

You plan on saving $10,000 a year (as a regular annuity) for the next 30 years. You...

You plan on saving $10,000 a year (as a regular annuity) for the next 30 years. You will then make equal withdrawals for each of the next 25 years (also a regular annuity). If the interest rate is 10% over the first 30 years but only 8% for the remaining 25 years, what will be the amount of each withdrawal? Place answer in the box below and use 2 decimals.

8. You are scheduled to receive annual payments of $60,000 for each of the next 20...

8. You are scheduled to receive annual payments of $60,000 for each of the next 20 years. The annual rate of return is 8 percent. What is the difference in the future value in year 20 if you receive these payments at the beginning of each year rather than at the end of each year? 9. You make the following deposits for the next five years into an investment account. All deposits are made at the end of the year...

1. Suppose that you will receive annual payments of $27,400 for a period of 20 years....

1. Suppose that you will receive annual payments of $27,400 for a period of 20 years. The first payment will be made 6 years from now. If the interest rate is 8.00%, what is the value of the annuity in year 5, what is the current value of this stream of cash flows? (Do not round intermediate calculations. Round your answer to 2 decimal places.) a) Value of security in year 5? b) Value of security today? 2. The...

You are 20 years old now and you will save $10,000 annually for the next 30...

You are 20 years old now and you will save $10,000 annually for the next 30 years and the interest rate is 9%. How much money you will have when you are 50 years old? A. $1,363,075.39 B. $899,937.73 C. $1,112,577.83 D. $998,181.47 What is the PV of $2,000 to be received in 10 years at an interest rate of 8%? A. $980.25 B. $926.39 C. $783.12 D. $1,000

Question