Question

1)please show with excel You buy an annuity which will pay you, and your heirs, $12,000...

1)please show with excel

You buy an annuity which will pay you, and your heirs, $12,000 a year forever. What is the value of this perpetuity today at a 7% discount rate?

200,000.00

222,222.22

120,000.00

171,231.00

171,428.57

2)please show how with excel

You make annual payments on a 10 year  $21,000 loan with 6% annual interest rate.   What is the principle portion of your 3rd payment?

1,065.45

2,475.38

196.82

2,852.53

1,790.15

Homework Answers

Answer #1

Q-1)

So,  the value of this perpetuity today is $171,428.57

Option 5

Q-2)

Calculating the Principal Portion in 3rd year using Excel PPMT function:-

So, the principle portion of your 3rd payment is $1790.15

Option 5.

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