Question

Nara inherits a perpetuity from her grandfather that will pay here $4000 today and every year...

Nara inherits a perpetuity from her grandfather that will pay here $4000 today and every year forever. The annual interest rate is 6%.

a) How much is Nara's inheritance worth? Nara decides to sell the perpetuity (for its present value) and instead buy an annuity due paying $P for the next 24 years.

b) What is $P? She changes her mind again, and decides instead on an annuity due paying $8000 per year for n years, except for the last (nth) payment which is a drop payment.

c) What is n?

d) What is the amount of the final payment?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Nara inherits a perpetuity from her grandfather that will pay here $3000 today and every year...
Nara inherits a perpetuity from her grandfather that will pay here $3000 today and every year forever. The annual interest rate is 4%. a) How much is Nara's inheritance worth? Nara decides to sell the perpetuity (for its present value) and instead buy an annuity due paying $P for the next 28 years. b) What is $P? She changes her mind again, and decides instead on an annuity due paying $6000 per year for n years, except for the last...
Suppose that you will inherit a perpetuity that will pay a payment of $4000 every other...
Suppose that you will inherit a perpetuity that will pay a payment of $4000 every other year. The first payment will occur 10 years from now (end of year 10). If the discount rate is 10% annually, how much is the perpetuity worth today? What constant payment for the next 10 years would be equivalent to owning this perpetuity?
A perpetuity of $4000 per year beginning paying 3 years from today offers an 3% return....
A perpetuity of $4000 per year beginning paying 3 years from today offers an 3% return. What is its present value?
Your friend promises you a perpetuity of $1 every year, which starts in year 1. However,...
Your friend promises you a perpetuity of $1 every year, which starts in year 1. However, your friend is an absent-minded guy, paying you $2 at year 10 but no payment at year 9. Except for these two years, in other years, the payment is always $1. Which of the following statements is true? Select one: a. your friend is better off for his being absent-minded b. you are better off for his being absent-minded c. there is no difference...
1. Today you deposited $15,000 into a 5-year CD that will pay 6 percent interest. How...
1. Today you deposited $15,000 into a 5-year CD that will pay 6 percent interest. How much will you withdraw from the account in 5 years? Round to the nearest cent. Do not include any unit (If your answer is $111.11, then type 111.11 without $ sign.) 2. You have a retirement account that earns 5 percent annual interest with the total account balance of $400,000. How much a year can you withdraw for next 20 years if your first...
QUESTION 1 All of the followings are the rights and privileges of a Common Stockholders EXCEPTING:...
QUESTION 1 All of the followings are the rights and privileges of a Common Stockholders EXCEPTING: a. Voting/Proxy Rights b. Right to Dividends c. Residual Right d. Pre-emptive Right e. Right to Interest Payments 10 points    QUESTION 2 Your best friend's parents want to buy a home in the Worcester County, but they don’t know the exact amount of money that they can afford to borrow. They can afford monthly payments of $ 1,800. A friendly bank in Worcester...
Please answer all 9 questions with explanation. Thank you On May 8, 1984, Hannah Eisenstat graduated...
Please answer all 9 questions with explanation. Thank you On May 8, 1984, Hannah Eisenstat graduated from Louisiana State University. She set to work opening a coffee shop in Baton Rouge called HannaH and found a perfect location in a new development. Using a $50,000 inheritance to finance the venture together with her own sweat equity, she started the business on August 1, 1984 as a sole proprietorship. The shop was profitable in the first year. Hannah found, however, that...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president by working to build good work relationships with other managers outside her own department. Brianna's behavior should be viewed as dysfunctional politics. functional politics. coercive power. functional influence. 2 points QUESTION 2 1. The Gingerbread Factory has a separate unit that makes their chocolate crunch cookies and another unit that is completely responsible for all operations in producing their ginger snap cookies. The Gingerbread...
What are 4 key things you learned about the topic from reading their paper? How does...
What are 4 key things you learned about the topic from reading their paper? How does the topic relate to you and your current or past job? Critique the paper in terms of the organization and quality. Team 3 answer questions above. Part I In today’s world we see fear among people when dealing with sexual harassment. This leads to people not reporting sexual harassment. A misconception about sexual harassment is that it’s only about touching and forcing other people...
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From...
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From the April 2004 Issue Save Share 8.95 In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales. By 2002, that figure had grown to $9.5 billion. What fashionable strategies did Progressive employ to achieve sevenfold growth in just over a decade? Was it positioned in a high-growth industry? Hardly. Auto insurance is a mature, 100-year-old industry...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT