Question

An investment offers $4,800 per year for 19 years, with the
first payment occurring one year from now. If the required return
is 11 percent, the present value of the investment is
$ . If the payments occurred for 31 years, the present
value of the investment would be $ . If the payments
occurred for 81 years, the present value of the investment would be
$ . If the payments last forever, the present value
would be $ **(Do not include the dollar signs ($).
Round your answers to 2 decimal places. (e.g., 32.16))**

Answer #1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

1.Present value=$4800[1-(1.11)^-19]/0.11

=$4800*7.83929421

which is equal to

=**$37628.61(Approx).**

2.Present value=$4800[1-(1.11)^-31]/0.11

=$4800*8.733146463

which is equal to

=**$41919.10(Approx).**

3.Present value=$4800[1-(1.11)^-81]/0.11

=$4800*9.088970679

which is equal to

=**$43627.06(Approx).**

**4.**Present value of perpetuity=Annual
inflows/interest rate

=$4800/0.11

which is equal to

=**$43,636.36(Approx).**

An investment offers $9,200 per year for 17 years, with the
first payment occurring one year from now. Assume the required
return is 12 percent.
What is the value of the investment today? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
Present value
$
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(Do not round intermediate calculations and round your
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An investment offers $6,500 per
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If the required return is 7 percent, what is the value of the
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round your final answer to 2 decimal places, e.g.,
32.16.)
Present value
$
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(Do not round intermediate calculations and round your
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An investment offers $5,200 per year for 20 years, with the
first payment occurring one year from now.
If the required return is 7 percent, what is the value of the
investment today? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g.,
32.16.)
What would the value today be if the payments occurred for 45
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your answer to 2 decimal places, e.g., 32.16.)
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your answer to 2 decimal places, e.g., 32.16.)
b.
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a.
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investment today? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g.,
32.16.)
b.
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your answer to 2 decimal places, e.g., 32.16.)
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a.
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your answer to 2 decimal places, e.g., 32.16.)
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SHOW ALL WORK
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