Question

If you put up $105,000 today in exchange for a 5.375 percent, 15-year annuity, what will...

If you put up $105,000 today in exchange for a 5.375 percent, 15-year annuity, what will the annual cash flow be? Show ALL Work

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

PV of Annuity:

Annuity is series of cash flows that are deposited at regular intervals for specific period of time.

PV of Annuity = Cash Flow * [ 1 - [(1+r)^-n]] /r
r - Int rate per period
n - No. of periods

Particulars Amount
PV Annuity $      1,05,000.00
Int Rate 5.3750%
Periods 15

Cash Flow = PV of Annuity / [ 1 - [(1+r)^-n]] /r
= $ 105000 / [ 1 - [(1+0.0538)^-180]] /0.0538
= $ 105000 / [ 1 - [(1.0538)^-180]] /0.0538
= $ 105000 / [ 1 - 0.456 ] /0.0538
= $ 105000 / [0.544 / 0.0538 ]
= $ 105000 / 10.1215
= $ 10373.97

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
If you put up $105,000 today in exchange for a 5.375 percent, 15-year annuity, what will...
If you put up $105,000 today in exchange for a 5.375 percent, 15-year annuity, what will the annual cash flow be?
if you put up 41,940 in exchange for a 8.6 percent, 12 year annuity what will...
if you put up 41,940 in exchange for a 8.6 percent, 12 year annuity what will the annual cash flow be (round time value factors to 6 decimal places and final to nearest dollar)
1) MoneyCo will pay you $20,500 a year for 10 years in exchange for $131,300 today....
1) MoneyCo will pay you $20,500 a year for 10 years in exchange for $131,300 today. What interest rate will you earn on this annuity? A) 6.92 percent B) 7.91 percent C) 8.85 percent D) 9.05 percent E) 10.11 percent 2. Aria is losing significant market share and thus its managers have decided to decrease the firm's annual dividend. The last annual dividend was $.86 a share but all future dividends will be decreased by 0.8 percent annually. What is...
A. What is the amount of the annuity purchase required if you wish to receive a...
A. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $260,000 for 15 years? Assume that the annuity will earn 13 percent per year. B. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 15-year annuity is $1.6 million and the annuity earns a guaranteed annual return of 13 percent. The payments are to begin at the end of the current year. C....
You are considering an annuity which costs $54700 today. The annuity pays $6100 a year. The...
You are considering an annuity which costs $54700 today. The annuity pays $6100 a year. The rate of return is 7 percent. What is the length of the annuity time period? (Do not round intermediate calculations.) rev: 07_11_2013_QC_32664, 07_12_2013_QC_32664 14.60 years 16.21 years 24.58 years 5.83 years 7.20 years
a. What is the amount of the annuity purchase required if you wish to receive a...
a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $240,000 for 20 years? Assume that the annuity will earn 10 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.4 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year. c....
11. What is the present value of a 10-year annuity with annual payments of 50 and...
11. What is the present value of a 10-year annuity with annual payments of 50 and an interest rate of 5? a. Do this with your calculator, indicating what number you put in each button. b. Do this in Excel, using the annuity formula. 12. What is the present value of a cash flow of 1000 being paid in 10 years with an interest rate of 5%? 13. What is the sum of the calculations in (11) and (12)? What...
Your Aunt gives you $5,000 today. You want to put it away and use it as...
Your Aunt gives you $5,000 today. You want to put it away and use it as a down payment on a new car in 2 years. You put it in a mutual fund investment with an online discount broker, earning 8% per year. a) (4 points) What will you have at the end of 2 years? SHOW ALL WORK FOR FULL CREDIT using the TI BAII Plus Calculator. b) (2 points) What is the total interest in $ earned on...
How much money would you have in a year if you put $1,000 in the bank...
How much money would you have in a year if you put $1,000 in the bank at an annual interest rate of 3 percent? How much would you have if you left all of that money in the bank for another year and annual interest rates increased to 4 percent in the second year? How much would you loan your brother-in-law if he said he could repay you $100 in six months, $200 in a year, and $500 in two...
a. What is the amount of the annuity purchase required if you wish to receive a...
a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $230,000 for 20 years? Assume that the annuity will earn 13 percent per year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))   Present value $    b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.4 million and the annuity earns a guaranteed annual...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT