Question

ANSWER BOTH QUESTIONS PLEASE

1. A perpetuity-immediate makes a payment of an amount K every three months. The present value of the perpetuity is $10,500. Interest is at a nominal annual rate of 6% compounded semiannually. In which of the following ranges is the amount K?

2. Deposits of $100 per month into an account start on January 1, 2015 and continue through December 1, 2034. The account earn a nominal annual interest rate of 6% compounded quarterly.

Find the value of the account on June 30, 2020.

Answer #1

1. Perpetuities in arithmetic progression. If a perpetuity has
first payment P and each payment increases by Q, then its present
value, one period before the first payment, is P/i + Q/i^2 Using
this formula, find the present value of a perpetuity-immediate
which has annual payments with first payment $360 and each
subsequent payment increasing by $40, at annual interest rate
1.3%.
The answer should be ($264,378.70).
2. Filip buys a perpetuity-immediate with varying annual
payments. During the first 5...

Bob Smith borrowed $200,000 on January 1, 2015. The interest
rate of 8% is compounded semiannually to be repaid January 1, 2025.
To repay this Bob wants to start making five equal annual deposits
into fund that earns 6% annum on January 1, 2020.
Required:What is the amount of the five annual
deposits that Bob needs to make?

A perpetuity will make payments of $100,000 every third year,
with the first payment occurring three years from now. The annual
nominal interest rate convertible quarterly is 8%. Find the present
value of this perpetuity.
(I did this problem, just want to check if I did it correctly
because the answer doesn't look right to me, not sure what I did
incorrectly, I got PV = 372,800.47)

Eric deposits 100 into a savings account at time 0, which pays
interest at an annual nominal rate of i, compounded semiannually.
Mike deposits 200 into a different savings account at time 0, which
pays simple interest at an annual rate of i. Eric and Mike earn the
same amount of interest during the last 6 months of the 8th
year.

At the start of every week, John goes to the bank and deposits
$125 from his last paycheck in a savings account paying a nominal
5.2% annual interest, compounded weekly. At the end of every month,
his coworker Cathy deposits $500 in an account paying a nominal
rate of 6% compounded monthly. Assuming they both started saving at
the same time and continue for 20 years, what will be the
difference (in $) between their respective balances at the end...

At the start of every week, John goes to the bank and deposits
$125 from his last paycheck in a savings account paying a nominal
5.2% annual interest, compounded weekly. At the end of every month,
his coworker Cathy deposits $500 in an account paying a nominal
rate of 6% compounded monthly. Assuming they both started saving at
the same time and continue for 20 years, what will be the
difference (in $) between their respective balances at the end...

For a deposit of $1027 at 6.4% over 2 years, find the
interest earned if interest is compounded semiannually,
quarterly, monthly, daily, and continuously.
The interest earned if interest is compounded semiannually
is----
2
Find the present value of the following future amount.
$2000 at 10% compounded annually for 30 years
The present value is-----
3 Suppose a savings and loan pays a nominal rate of
1.4%
on savings deposits. Find the effective annual yield if interest
is compounded quarterly...

5. Answer the following 2
questions:
How much must be invested now to provide an amount of OMR
15,000 in seven years’ time assuming interest is compounded
quarterly at a nominal annual rate of 9 per cent? What is the
effective annual rate?
Mr. Haitham buys a vehicle on hire purchase paying 7 annual
instalments of OMR1,800, the first being an immediate cash deposit.
Assuming an interest rate of 9 per cent is being charged by the
hire purchase...

Adam borrows an amount at an annual interest rate of 7%. He
repays all interest and principal in a lump sum at the end of ten
years from now. Adam uses the amount borrowed to purchase a 5-year
bond with a par value of 1, 000 with coupons at a nominal rate of
10% payable semiannually, with the first coupon paid at the end of
6-month period from now. The bond is redeemed at par and Adam’s
yield rate for...

1. A perpetuity-due has monthly payments in this pattern: Q, 2Q,
3Q, Q, 2Q, 3Q, Q, 2Q, 3Q, . . . The present value of the perpetuity
is $700,000 and the effective annual discount rate is 6%. Find
Q.
2. A 30 year annuity-immediate has first payment $1200 and each
subsequent payment increases by 0.5%. The payments are monthly and
the annual effective rate is 8%. Find the accumulated value of the
annuity at the end of 30 years.
3....

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