Question

A. What is the present value of a 3-year annuity of $110 if the discount rate...

A. What is the present value of a 3-year annuity of $110 if the discount rate is 5%?  (Do not round intermediate calculations. Round your answer to 2 decimal places.)

B. What is the present value of the annuity in (a) if you have to wait an additional year for the first payment? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer A.

Annual deposit = $110
Number of deposits = 3
Discount rate = 5%

Present value of annuity = $110/1.05 + $110/1.05^2 + $110/1.05^3
Present value of annuity = $110 * (1 - (1/1.05)^3) / 0.05
Present value of annuity = $110 * 2.72325
Present value of annuity = $299.56

Answer B.

Annual deposit = $110
Number of deposits = 3
Discount rate = 5%

Present value of annuity = $110/1.05^2 + $110/1.05^3 + $110/1.05^4
Present value of annuity = $110 * (1 / 1.05) * (1 - (1/1.05)^3) / 0.05
Present value of annuity = $110 * 2.59357
Present value of annuity = $285.29

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
What is the present value of a 3-year annuity of $300 if the discount rate is...
What is the present value of a 3-year annuity of $300 if the discount rate is 7%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of the annuity in (a) if you have to wait an additional year for the first payment? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
a. What is the present value of a 3-year annuity of $150 if the discount rate...
a. What is the present value of a 3-year annuity of $150 if the discount rate is 7% b. What is the present value of the annuity in (a) if you have to wait an additional year for the first payment.
What is the present value of $4,000 per year, at a discount rate of 10 percent,...
What is the present value of $4,000 per year, at a discount rate of 10 percent, if the first payment is received six years from now and the last payment is received 20 years from now? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
What is the present value of an annuity of $6,000 per year, with the first cash...
What is the present value of an annuity of $6,000 per year, with the first cash flow received three years from today and the last one received 25 years from today? Use a discount rate of 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      Present value $   
Problem 4-48 Calculating Present Values A 4-year annuity of eight $9,800 semiannual payments will begin 7...
Problem 4-48 Calculating Present Values A 4-year annuity of eight $9,800 semiannual payments will begin 7 years from now, with the first payment coming 7.5 years from now. a. If the discount rate is 7 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the discount rate is 7 percent compounded monthly, what is the value three years...
Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of...
Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $2 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))   Annual cash flows $     b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of...
What is the value today of $3,000 per year, at a discount rate of 8 percent,...
What is the value today of $3,000 per year, at a discount rate of 8 percent, if the first payment is received 7 years from today and the last payment is received 25 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Please show formula and BAII solution if possible.
A 6-year annuity of twelve $11,800 semiannual payments will begin 9 years from now, with the...
A 6-year annuity of twelve $11,800 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.     If the discount rate is 12 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)       Value of the annuity $          If the discount rate is 12 percent compounded monthly, what is the value three...
A 4-year annuity with eight semiannual payments of $11,400 will begin 7 years from now, with...
A 4-year annuity with eight semiannual payments of $11,400 will begin 7 years from now, with the first payment coming 7.5 years from now. If the discount rate is 11 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Value of the annuity $ If the discount rate is 11 percent compounded monthly, what is the value three years from...
Suppose you just bought a 20-year annuity of $7,800 per year at the current interest rate...
Suppose you just bought a 20-year annuity of $7,800 per year at the current interest rate of 10 percent per year. What is the value of your annuity today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Present value $ What happens to the value of your investment if interest rates suddenly drop to 5 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Present value...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT