Question

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.

Answer #1

Rate per quarter =Annual Rate/4 =6%/4 =1.5%

Since the perpetuity is monthly payment we need to calculate
monthly rate

Since in a quarter there are 3 months hence

**Monthly Rate
formula =(1+Rate Per quarter)^(1/3)**-1
=(1+1.5%)^(1/3)-1 =0.497520627265247%

Since the perpetuity begins at year 5

The value of Perpetuity at end of year 5 =**PMT/Monthly
Rate+PMT** (Since Perpetuity begins at start of month)

=100+100/0.497520627265247% =20199.6691

Number of Months =5*12 =60

PV of Perpetuity today =**The value of Perpetuity at end
of year 5/(1+r)^5**

=20199.6691/(1+0.497520627265247%)^60 =**14997.66**

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!

13. ABC Corp. is going to pay an annual dividend of $4.23 a
share on its
common stock next year. This year, the company paid a dividend of
$4.50 a share. The
company adheres to a constant rate of growth dividend policy. What
will one share of this
common stock be worth seven years from now if the applicable
discount rate is 12
percent?
Could you explain the question in detail with formula plz! I
don't understand others poster answers.

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.

8. You are planning to save for retirement over the next 25
years. To do this,
you will invest $3,000 a quarter in a stock account and $1,000 a
quarter in a bond
account. These investments will be made at the beginning of each
quarter. The return of
the stock account is expected to be 8%, and the bond account will
pay 4%. When you
retire, you will combine your money into an account with a 6%
return. How much...

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.).

If the discount rate is 24 percent compounded
quarterly, what is the effective weekly
rate? (Assume a 52 week year.)
26.25%
1.92%
0.45%
7.43%

1. The appropriate discount rate
for the following cash flows is 6 percent compounded
quarterly.
Year
Cash
Flow
1
$900
2
600
3
0
4
1,100
Required:
What is the present value of the
cash flows?
A. $2,202.3
B. $2,254.36
C. $2,247.24
D. $1,129.24
E. $2,292.19
2. What is the future value of $500 in 23 years assuming an
interest rate of 9 percent compounded semiannually?
A. $665.56
B. $3,787.21
C. $3,628.94
D. $3,597.85
E. $594.59...

What is the present value of $1,500 per year, at a discount rate
of 6 percent, if the first payment is received 7 years from now and
the last payment is received 32 years from now?

10. Consider the following U.S. Treasury bond quotation from The
Wall Street
Journal. It is June 27, 2020. The bond has a $1,000 face value and
pays semiannual
coupons.
Maturity Coupon Bid Asked Chg AskedYld
06/27/2027 3.675 76.1625 ????? +0.18 8.000
(a) (3 points) How much will an investor receive if he/she sells
this T-bond?
(b) (4 points) Fill in the missing information for Asked?
Could you explain the question in detail with formula plz! I
don't understand others poster...

The appropriate discount rate for the following cash flows is 9
percent compounded quarterly.
Year
Cash Flow
1
$600
2
600
3
0
4
1,300
What is the present value of the cash flows?

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