Question

5. Using a discount rate of 4.8% APR, compounded monthly, calculate the present value of a monthly perpetuity pay‐ ment of $5250 if: (a) the first payment is made one month from now (2 pts.), (b) the first payment is made today (2 pts.), and (c) the first payment is made 30 months from now (2 pts.).

Answer #1

(a) THE FIRST PAYMENT IS MADE ONE MONTH FROM NOW

PRESENT VALUE OF PERPETUAL PAYMENTS = PERPETUAL PAYMENT/(RATE/12)

PRESENT VALUE OF PERPETUAL PAYMENTS = 5250/(0.048/12) = $1312500

**ANSWER : $1312500**

(b) THE FIRST PAYMENT TODAY

PRESENT VALUE OF PERPETUAL PAYMENTS FROM TODAY= PERPETUAL PAYMENT/( RATE/12) (1 +RATE/12)

PRESENT VALUE OF PERPETUAL PAYMENTS = [5250/(0.048/12)]*(1+0.048/12) = $1317750

**ANSWER : $1317750**

(c) THE FIRST PAYMENT IS MADE 30 MONTHS FROM NOW

PRESENT VALUE OF PERPETUAL PAYMENTS =

[PERPETUAL PAYMENT/( RATE/12)] [1/(1 +RATE/12)^{30}
]

PRESENT VALUE OF PERPETUAL PAYMENTS =
[5250/(0.048/12)]*[1/(1+0.048/12)^{30}]= $1164318.75

**ANSWER : $1164318.75**

Using a discount rate of 3.6% APR, compounded monthly, what is
the present value of a monthly perpetuity payment of $2,500 if: a)
The first payment is made today b) The first payment is made 12
months from now.

A growing monthly perpetuity will start 6 months from today. If
the discount rate is 6% APR compounded monthly, what is the value
of the perpetuity today (at time t=0) if the growth rate is 1.2%
APR compounded monthly and the first payment is $100? *Round to the
nearest $

You open an investment account that pays 12% APR, compounded
monthly. Compute the present value of 10 monthly payments of $5000
(the first payment made 1 month from today).

Which of the following APRs compounded monthly is equivalent to
an APR of 14.90% compounded quarterly using 360-day calendar years,
30-day months, and 3-month quarters?
Now, Which of the following APRs compounded quarterly is
equivalent to an APR of 7.90% compounded daily using 360-day
calendar years, 30-day months, and 3-month quarters?

6. Given a 6 percent discount rate compounded quarterly, what is
the present
value of a perpetuity of $100 per month if the first payment does
not begin until the end
of year five?
Could you explain the question in detail with formula plz! I
don't understand others poster answers.

Which of the following APRs compounded monthly is equivalent to
an APR of 15.15% compounded quarterly using 360-day calendar years,
30-day months, and 3-month quarters?

Which of the following APRs compounded monthly is equivalent to
an APR of 13.65% compounded quarterly using 360-day calendar years,
30-day months, and 3-month quarters?

Which of the following APRs compounded monthly is equivalent to
an APR of 14.15% compounded quarterly using 360-day calendar years,
30-day months, and 3-month quarters?
12.960%
13.320%
13.680%
14.040%
14.400%

5. What is the present value of $100 per month at a discount
rate of 6%, if the
first payment is received 5 years from now and the last payment is
received 18 years from
now?
Could you explain in detail with formula plz!

Which of the following APRs compounded monthly is equivalent to
an APR of 13.15% compounded quarterly using 360-day calendar years,
30-day months, and 3-month quarters?
Question 7 options:
12.029%
12.364%
12.698%
13.032%
13.366%

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 35 minutes ago

asked 35 minutes ago

asked 35 minutes ago

asked 38 minutes ago

asked 58 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago