Question

What is the price of a uniform annuity making 5 consecutive payments of $10,000 per year...

What is the price of a uniform annuity making 5 consecutive payments of $10,000 per year at a 5% annual interest rate (assume the first payment is paid out in year 1)?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Information provided:

Annual payment= $10,000

Time= 5 years

Interest rate= 5%

Ordinary Annuity refers to an annuity that occurs at the end of the period.

The question is calculated by computing the present value of ordinary annuity.

Enter the below in a financial calculator to compute the present value of ordinary annuity.

PMT= 10,000

I/Y= 5

N= 5

Press the CPT key and PV to compute the present value of ordinary annuity.

The value obtained is 43,294.77.

Therefore, the price of the uniform annuity is $43,294.77.

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
A 10-year annuity has annual payments of $1,000. The first payment is in 1 year. If...
A 10-year annuity has annual payments of $1,000. The first payment is in 1 year. If interest is 5%p.a (effective annual rate) for the first 3 years followed by 6%p.a (effective annual rate) for 7 years, what is the future value of this annuity at the end of 10 years? Select one: a. $13,134.03 b. $13,001.45 c. $12,002.34 d. $13,969.78
1. Find the present value of a 30-year annuity-due with semiannual payments in which the first...
1. Find the present value of a 30-year annuity-due with semiannual payments in which the first payment is $20,000, the second payment is $21,600, the third payment is $23,328, the fourth payment is $25,194.24, etc., assuming an annual effective rate of interest of 16%. 2. Find the present value of a varying perpetuity-DUE in which payments are made every two years with the first payment being $245, and each payment thereafter is $150 larger than the previous payment. Assume the...
10) Part A. ?(Annuity payments) Lisa Simpson wants to have ?$1,600,000 in 60 years by making...
10) Part A. ?(Annuity payments) Lisa Simpson wants to have ?$1,600,000 in 60 years by making equal annual? end-of-the-year deposits into a? tax-deferred account paying 8.50 percent annually. What must? Lisa's annual deposit? be? (Round to the nearest? cent.) Part B. (Present value of annuity? payments) The state? lottery's million-dollar payout provides for $1.4 million to be paid in 20 installments of ?$70,000 per payment. The first ?$70,000 payment is made? immediately, and the 19 remaining ?$70,000 payments occur at...
1. A 5-year annuity of $350 monthly payments begins in 10 years (the first payment is...
1. A 5-year annuity of $350 monthly payments begins in 10 years (the first payment is at the end of the first month of year 10, so it's an ordinary annuity). The appropriate discount rate is 12%, compounded monthly. What is the value of the annuity 4 years from today? 2.   A 5-year annuity of $350 monthly payments begins in 10 years (the first payment is at the end of the first month of year 10, so it's an ordinary...
1. What is the PV of an ordinary annuity with 5 payments of $3,400 if the...
1. What is the PV of an ordinary annuity with 5 payments of $3,400 if the appropriate interest rate is 4.5%? Answer just the dollar amount without the + or - sign. Round to the nearest dollar. 2. A public company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 7.5% on these bonds. What is the bond's price? Answer just the...
A 10-year annuity of twenty $10,000 semiannual payments will begin 11 years from now, with the...
A 10-year annuity of twenty $10,000 semiannual payments will begin 11 years from now, with the first payment coming 11.5 years from now. a. If the discount rate is 9 percent compounded monthly, what is the value of this annuity 8 years from now? b. What is the current value of the annuity?
An annuity pays $20,000 per quarter for 25 years and the payments are made at the...
An annuity pays $20,000 per quarter for 25 years and the payments are made at the end of each quarter. The first payment is made at the end of the first quarter. If the annual interest rate is 8 percent compounded quarterly for the first 10 years, and 12 percent compounded quarterly thereafter, what is the present value of the annuity (i.e, value of the annuity now)?
What is the present value of the following series of cash payments: $8,000 per year for...
What is the present value of the following series of cash payments: $8,000 per year for four consecutive years starting one year from today, followed by annual cash payments that increase by 2% per year in perpetuity (i.e. cash payment in year 5 is $8,000*1.02, cash payment in year 6 is $8,000*1.022, etc.)? Assume the appropriate discount rate is 5%/year. ( PLZ USE EXCEL TO ANSWER IT)
A bond currently promises annual payments of $1000 per year for 5 years. In addition, the...
A bond currently promises annual payments of $1000 per year for 5 years. In addition, the bond will make an additional single payment on maturity (in the fifth year) of $10,000. (a) If the interest rate on similar investments is currently 5% (i=.05) what will be the price of this bond? Explain and show your calculations. (b) What happens to the price if the interest rate on similar investments falls to 4%? Show your work.
Phil Dunphy wants to receive a 25-year annuity of $40,000 annual payments. The first $40,000 payment...
Phil Dunphy wants to receive a 25-year annuity of $40,000 annual payments. The first $40,000 payment is exactly one year from today and the last (25th) payment is exactly 25 years from today. The annual interest rate is 7.5% per year. Calculate the Present Value today (t=0) of this annuity.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT