1) Consider the following timeline where the firm requires the annuity to provide a minimum return of .....%. (write any number for interest rate): Project A End of Yoar 3 -50,000 15,000 15,000 15,000 15,000 Calculate Future Value (FV) using two methods (Timeline and Equation) and compare the answers.

1) Consider the following timeline where the firm requires the annuity to provide a minimum return of .....%. (write any number for interest rate): Project A End of Yoar 3 -50,000 15,000 15,000 15,000 15,000 Calculate Future Value (FV) using two methods (Timeline and Equation) and compare the answers.

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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Calculate the present value of the following annulties, assuming each annuity payment is made at the end of each compounding period. (FV of $1, PV of $1, FVA of $1, and PVA of S1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) \table[[, \table[[Annuity], [Payment]], \table [[ Annual], [Rate]], \table[[Interest], [Compounded]], \table [[Period], [Invested]], \table [[Present Value of], [ Annuity]]], [1., $5,000, 7.0%, Semiannually,3 years,], [2., 10, 000, 8.0%, Quarterly,2 years, ], [3., 4,000, 10.0 %, Annually,5 years,]]
2) Consider the following timeline where the firm requires the annuity to provide a minimum return of 20%.: Project A End of Yoar 3 -100,000 15,000 20,000 30,000 Calculate Present Value (PV) (Write any number for year 3)
Use the formula for the present value of an ordinary annuity or the amortization formula to solve the following problem. PV=$12,00; PMT=$400; n=55; =i?
Use the formula for the present value of an ordinary annuity or the amortization formula to solve the following problem. PV $10,000; i=0.02; PMT $250; n ? (Round up to the nearest integer.) n =
2) Consider the following timeline where the firm requires the annuity to provide a minimum return of 20%.: Project A End of Year -100,000 15,000 20,000 ? 30,000 Calculate Present Value (PV) (Write any number for year 3)
The formula 1/(1 + r)t is used to calculate Multiple Choice The present value annuity factor. The present value interest factor. The future value interest factor. The present value of $1 occurring t periods from now.
Present using the rate of return method (ROR) with the formula. If the NPV is used to determine the ROR, please explain why? Rate of interest = 10%
Prove that it is feasible using 1. ANNUAL WORTH METHOD 2. PAYBACK METHOD Rate of interest = 10%
For each of the following situations involving annuities, solve for the unknown. Assume that interest is compounded annually and that all annuity amounts are received at the end of each period. (/= interest rate, and n= number of years) Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. (FV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) 1. $ 2 3 4. 15 Present Value Answer is complete but not entirely correct. Annuity Amount 2.200 145,000 190,000 72.523 45,787 8,784 558,865 480,945 520,000 240,000 8% 1.0% 9% 2.5% 10% n= 5 4 30 8 4
Increasing the number of periods will increase all of the following except Select one: a. the present value of $1. b. the future value of an annuity. c. the future value of $1.
For question 1 parts a,b,c below, show all work that justifies your results. You will show how to use series to compare values of payments over time with a lump sum payment today. The value of future payments in terms of today's dollars is known as the present value of those payments. 1. a. What is the present value formula if annual payments of C dollars continue indefinitely, assuming an average annual interest rate r? Write the answer as a series using summation notation b. Rewrite the summation formula found in part a. as a geometric series, and then find the sum. The answer will be a fraction containing C and r. c. For annuities with a present value of $1 million, calculate the annual payouts given over 25 years assuming interest rates of 1%, 5%, and 10%. Use the formula you obtained in part b. There are three answers- one for each rate, measured in dollars. Round each answer to the nearest cent.
Calculate the future value of the following annuities, assuming each annuity payment is made at the end of each compounding period. (FV of $1. PV of $1, EVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) 1. Annuity Payment $ 3,700 Annual Rate Interest Period Compounded Invested Future Value of Annuity 7.0% Semiannually 9 years 2. 6,700 8.0% Quarterly 5 years 3. 5,700 12.0% Annually 6 years

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