Question

PLEASE ANSWER ALL #3 Derek will deposit $1,897.00 per year for 14.00 years into an account...

PLEASE ANSWER ALL

#3

Derek will deposit $1,897.00 per year for 14.00 years into an account that earns 11.00%. Assuming the first deposit is made 6.00 years from today, how much will be in the account 39.00 years from today?

#4

What is the value today of receiving $2,065.00 per year forever? Assume the first payment is made next year and the discount rate is 9.00%.

#5

What is the value today of receiving $2,155.00 per year forever? Assume the first payment is made 9.00 years from today and the discount rate is 10.00%.

#6

Suppose you deposit $2,609.00 into an account today that earns 15.00%. In 5.00 years the account will be worth $________.

Homework Answers

Answer #1

#3

Future Value Annuity =

r = 0.11

n = 14 years

=

= 57090.0594528

Now value after 39 years will be

= 57090.0594528 * (1+r)^n

r = 0.11

n = 19

= 57090.0594528 * (1+0.11)^20

= 460277.84

Value after 39 years will be $460277.84

#4

Present Value = Annual Cash Flow / Discount Rate

= 2065 / 0.09

= 22944.44

#5

Present Value after 9 years = Annual Cash Flow / Discount Rate

= 2155 / 0.10

= 21550

Present value today = 21550 / (1+0.10)^9

= 9139.30

#6

Future Value = present Value * (1+r)^n

= 2609 * (1+0.15)^5

= 5247.63

(1+r)" โ€“ 1 Periodic Payment * r

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