9. A perpetuity due pays 600 in the first year, and in each subsequent year,the payment is 1% greater than the payment before. At an annual effectiveinterest rate of i, the present value for the perpetuity is 152,100. Just afterreceiving the third payment, the perpetuity is replaced by a 30 year annuityimmediate, and the present value for this annuity is also based on an annualeffective interest rate of i. The annuity has payments ofFind X.X, 2X, 3X, 4X, 5X, ...., 29X, 30X

Given: PV = P + (1.01P)/(1 + i) + (1.02P)/(1 + i)^2 + (1.03P)/(1 + i)^3 + ...PV = 152,100 then use…

Answered: 9. A perpetuity due pays 600 in the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A 20-year annuity X has annual payments of $10,000 at the beginning of each year for 10 years, then annual payments of $20,000 at the beginning of each year for the next 10 years. A perpetuity Y has payments of Q at the end of each year for 10 years, then payments of 2Q at the end of each year thereafter. The present values of X and Y are equal when calculated using an annual effective interest rate of 5%. Find Q.
An annuity provides for 20 annual payments. The first payment of $ 100 is made immediately and the remaining payments increase by 15 % per year. Interest is calculated at 20 % per year. Calculate the present value of the annuity
A thirty-year annuity has end - value of the annuity if i = 3 % - of month payments. The first year the payments are each $ 120. In subsequent years each payment increases by $5 over what it was the previous year. Find the present (Round your answer to the nearest cent.)
A 15-year annuity pays $1,750 per month, and payments are made at the end of each month. If the APR is 9 percent compounded monthly for the first seven years, and APR of 6 percent compounded monthly thereafter, what is the value of the annuity today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value
A perpetuity-due with annual payments consists often level payments of X followed by a series of increasing payments. Beginning with the eleventh payment, each payment is 1.5% larger than the preceding payment. Using an annual effective interest rate of 5%, the present value of the perpetuity is 45,000. Calculate X. B C 1,679 E 1,696 1,737 D 1,763 1,781
An annuity pays 8 at the end of each year for five years, starting atthe end of the 12th year. Determine the value of the annuity immediately beforethe first payment using an annual effective interest rate of 7%. which answer is correct in the pictures ie $15.58 or $32.80 (dont use exel in the calculation)
Annuity payments are assumed to come at the end of each payment period (termed an ordinary annuity). However, an exception occurs when the annuity payments come at the beginning of each period (termed an annuity due). What is the future value of a 15-year annuity of $1,600 per period where payments come at the beginning of each period? The interest rate is 9 percent. Use Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. To find the future value of an annuity due when using the Appendix tables, add 1 to n and subtract 1 from the tabular value. For example, to find the future value of a $100 payment
There is a perpetuity due in which the payments increase by 5 percent per year, and the present value of the 6’th payment is equal to the present value of the 8’th payment. The first payment is 500 dollars. Find both the effective interest rate and the present value.
14. Annuity A pays X at the end of each year. The first payment occurs at time 6 years, and the last payment occurs at time 10 years. Annuity B pays $81.06 at the end of each year. The first payment occurs at time 1 year, and the last payment occurs at time 5 years. The current value of annuity B at the end of five years is $475.54. The present value at time 0 of annuity A is twice the present value at time 0 of annuity B. Determine X. D 350 E 387 A 238 C 313 B 275
A 25-year annuity was purchased with $225,000 that had accumulated in a RRSP. The annuity provides a semiannually compounded rate of return of 9.5% and makes equal month-end payments. What amount of principal will be included in Payment 206? What will be the interest portion of Payment 187? How much will the principal be reduced by Payments 50 to 100 inclusive? How much interest will be paid in the 14th year? What will be the amount of the final payment?
A thirty-year annuity has end-of-month payments. The first year the payments are each $120. In subsequent years each payment increases by $15 over what it was the previous year. Find the present value of the annuity if i - 4%. (Round your answer to the nearest cent.) A continuously paying level annuity pays $20 each year for fifteen years. The force of interest is (4 + t)1, Find the present value of this annuity. (Round your answer to the nearest cent.) $31.16 Submit Answer An amortized loan is repaid with annual payments which start at $300 at the end of the first year and increase by $35 each year until a payment of $1,140 is made, after which they cease. If interest is 3% effective, find the amount of principal in the fourteenth payment. (Round your answer to the nearest cent.) $ 755.00
An increasing annuity makes annual payments, and the first payment occurs in 6 months. The annuity pays 36 in 6 months, 39 in 1.5 years, 42 in 2.5 years, and so on until a final payment of 78 in 14.5 years. Using an annual effective interest rate of 14%, calculate the present value of the annuity. O A) 281 B) 288 C) 297 OD) 308 E) 329

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