Question

a. An investment pays you $20,000 at the end of this year, and $10,000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 3% per year?

a. $27,753

b. $66,607

c. $55, 506

d. $44,405

B. A perpetuity has a PV of $27,000. If the interest rate is 4%, how much will the perpetuity pay every year?

a. $540

b. $864

c. $1080

d. $648

Answer #1

If $9,000 is invested in a certain business at the start of the
year, the investor will receive $2,700 at the end of each of the
next four years. What is the present value of this business
opportunity if the interest rate is 7% per year?
A. $73
B. $145
C. $233
D. $175
_____________________________________
An investment pays you $20,000 at the end of this year, and
$10,000 at the end of each of the four following years. What is...

An investment pays out $20,000 at the end of the year, followed
by payments of $30,000, $40,000, and $50,000 at the end of the
subsequent years. Yields in the market are expected to steadily
increase. The discount rate for the first year is 6%, for the
second year is 7%, for the third year is 8%, and for the fourth
year is $9%. How much would you be willing to pay for this
investment? Please show all calculations in excel!

You can purchase an investment that pays $5,000 at the end of
each year for twenty years. The investment pays a 3% annual
interest rate. How much should you pay for the investment
today?

An investor pays $10,000 today to purchase an investment that
returns
$5,000 at the end of each of years 2, 4, and 5. The returns are
immediately
reinvested at an annual interest rate of 5%. Calculate the annual
effective yield
rate for the investor at the end of the fifth year.
(a) 9.91%
(b) 12.00%
(c) 12.45%
(d) 13.11%
(e) 15.13%

Give the present value of a perpetuity that pays $1,000 at the
end of every year. The first payment occurs at the end of the fifth
year and the annual effective interest rate is 3%.

What is the present value of an annuity that pays $20,000 at the
end of each year for the next ten years if the discount rate is
8.75%? Group of answer choices
A. $141,133.27
B. $129,777.72
C. $8,644.45
D. $300,256.76

A perpetuity pays $1000 at the end of every month for 11 months
of each year. At the end of the 12th month of each year, it pays
double that amount. If the effective ANNUAL rate is 10.4%, what is
the present value of this perpetual annuity?

Suppose that you deposit? $10,000 in an account that pays? 6%
interest and you want to know how much will be in your account at
the end of 10 years. To solve this problem in Microsoft? Excel, you
would use which of the following Excel? formulas?
=FV?(.06,10,0,10000)
B.
?=PV?(.06,10,0,10000)
C.
?=PV?(.06,10000,0,10)
D.
?=FV?(.06,10000,0,10)

Problem 1:
a) An annuity pays into an account 100 at end of year 2, 200 at
end of year 3, ..., up to 900 at end of year 10. Interest rate is
7% per year. At end of year 12, how much is in the account
b) An annuity pays 800 at end of year 1, 900 at end of year
2,..., 2000 at end of year 13. What is the present value of the
annuity? Use i =...

You have been offered an investment that pays $500 at the end of
every 6 months for the next 3 years. The nominal interest rate is
12 percent; however, interest is compounded quarterly. What is the
present value of the investment? 1. $2,458.66 $2,444.67 $2,451.73
$2,463.33 $2,437.56

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