A perpetuity will pay $800 per​ year, starting five years after the perpetuity is purchased. What is the present value​ (PV) of this perpetuity on the date that it is​ purchased, given that the interest rate is 3​%?

Q: Find the present value of a perpetuity paying $50,000 annually if the discount rate is 6%.

A: In the given question we require to calculate the present value of a perpetuity. In case of…

Q: If the future value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what…

A: Formula to compute future value of annuity due:

Q: An annuity due which pays 100 per month for 12 years has a present value of 7,908.   Calculate the…

A: We need to use RATE function in excel to calculate annual effective interest rate.The formula is:…

Q: What is the Present Value of a 3-year ordinary annuity of $100 at 5%?  For clarity, the annuity pays…

A: present value of ordinary annuity formula: PVA=A×1-11+rnrwhere,A=annual paymentr=interest…

Q: What is the present value of a perpetuity that pays $3,800 per year if the appropriate interest rate…

A: Given details are : Annual payment = $3800 Interest rate = 5% = 0.05 From these details we need to…

Q: An engineer is entitled to receive P25,000 at the beginning of each year for 18 years. If the rate…

A: Solution 1: Present value of annuity = P25,000 * Cumulative PV factor at 4% for 18 periods of…

Q: Find the interest rate that an ordinary annuity pays, if the annuity pays $312 per month with its…

A: An annuity pays regular and constant payments over a period of time. Here the annuity amount is $312…

Q: What is the difference in present value between a perpetuity that pays $500 per year and an ordinary…

A: Annual payment (A) = $500 n = 23 years for ordinary annuity r = 7%

Q: Find the future value of an ordinary annuity of $700 paid at the end of each year for 6 years, if…

A: Future Value: It refers to the amount or future worth of an asset at a particular date in the…

Q: An annual perpetuity of $10,000 has a present value of $250,000.  What is the annual interest rate?

A: Present value of an annual perpetuity = Annual cash flow/Interest rate Interest rate = Annual cash…

Q: An annuity pays out $20000 per year. Because of inflation, each year one dollar is worth what 0.95…

A: Annuity per year = $20,000Because of inflation, each year 1 dollar is worth what $0.95 was worth of…

Q: A 40-year-old individual will be paid 100 TL in the first year at the beginning of the term and 50…

A: The payment system for any investment plan or project can be different. The individual can use the…

Q: What is the present value of an ordinary annuity of $1,600 per year for 6 years discounted back to…

A: In the given question we require to compute the present value of ordinary annuity. Annuity payment =…

Q: Consider a perpetuity that pays 100 at the end of each year for the first 10 years and 50 at the end…

A: Perpetuity is series of cash flows which happens at a periodic interval till perpetuity

Q: 1. The annual rent of a perpetuity is $1000, payable in semi-annual stallments. Find the present…

A: The present value is the present worth of the amount that will be paid or received at present or…

Q: What’s the present value of a perpetuity that pays $300 per year if the appropriate interest rate is…

A: present value of a perpetuity = Annual payment/Discount rate

Q: What is the present value of an annuity of $4000 received at the beginning of each year for the…

A: The present value of an annuity is an estimate of the present worth of future annuity payments based…

Q: Calculate the future value of an ordinary annuity that pays $2,350 at 6% for 6 years. Also determine…

A: Annuity is the series of periodic payments. If the annuity payment is made at the end of the periods…

Q: Use the ordinary annuity formula shown to the right to determine the accumulated amount in the…

A: Principal amount = $60  Time period = 10 years  Interest rate = 5% Compounded = semi-annually

Q: Suppose you are a beneficiary designated to immediately receive P8674 each year for 10 years,…

A: Annuity means a series of annual payments are being made or received. Annuity can be ordinary…

Q: What is the present value of a Annuity where the investor receives $10,000 every year for 10 years…

A: Annuity = a = $10,000Time = t = 10 yearsInterest rate = r = 4.5%

Q: What is the future value​ (FV) of this​ perpetuity, given that the interest rate is 3​%?

A: The future value of an investment forecasts the expected value of an investment at a given future…

Q: What amount will be paid at the beginning of every month for 10 years if the present value is 20O,…

A: The payment flow which continues for a definite time period and terminates after lapse of time…

Q: If the present value of an ordinary, 6-year annuity is $9,400 and interest rates are 9.5 percent,…

A: Time value of money is the concept widely used by the management to determine the worth of money…

Q: An annuity pays a fixed amount of $3,000 at the end of each of the next 5 years. Assume the interest…

A: we will be using excel function =PV and =FV to calculate present value and future value of annuity…

Q: What is the present value of a perpetuity that pays $250 per year if the appropriate interest rate…

A: In the given question we are given five options regarding present value of perpetuity and we need to…

Q: What is the value today of a 15-year annuity that pays $630 per year? The annuity's first payment…

A: An annuity refers to a series of periodic payments exchanged in place of a lump sum payment. It is…

Q: An annual perpetuity has a constant cash flow of $1000.  If the interest rate is 7% compounded…

A: Given, Annual cash flow: $1,000Interest rate: 7%Present value of perpetuity=Annual cash…

Q: Suppose that an individual invests $2,500 at the end of each of the next 6 years and earns an…

A: Whenever we are finding present value of a series of fixed payments made in the future, it is called…

Q: what is the value of the annuity today

A: We can determine the PV of annuity to year 3 and then discount it to year 0 using PV formula. r =…

Q: A perpetuity of $1 each year, with the first payment due immediately, has a present value of $25 at…

A: Perpetuity is payment forever and continuous payments and immediate annuity start with payment…

Q: A 20-year annuity X has annual payments of $10,000 at the beginning of each year for 10 years, then…

A: A series of payment made at equal interval is called Annuity.

Q: The present value of an annuity is payable annually for 2 years, with the first payment at the end…

A: Value of an annuity refers to nominal worth for each payment. It implies for amount at which annuity…

Q: You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement.…

A: Given, The cashflows is $90,000 The rate of interest is 8%

Q: For $10,000, you can purchase a five-year annuity that will pay $ 2,504.57 per year for five years.…

A: Duration of an annuity means the time period for which the annuity will provide return to the…

Q: Determine a series that represents the present value of a perpetuity of $1,000 at an annual interest…

A: In this present value of perpetuity is given we have to find out the ANNUITY payment.

Q: What is the value of a 30-year annuity that pays $2500 a year? The annuity’s first payment will be…

A: As a fist step, let's shifts ourselves to the end of t  = 10 years.Annuity, A = $ 2,500; n = number…

Q: If the future value of an ordinary, 7-year annuity is $7,900 and interest rates are 9.0 percent,…

A: Future value of an ordinary annuity = $7,900 Interest rate = 9%

Q: company needs to buy an annuity package that will provide a future income to an individual over a…

A: Annuity is the uniform payments over a period of time and annuity dues are paid at the beginning of…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.