A ten-year security pays cash flows of $1,000 a year at the end of each of the next five years t 1, 2, 3, 4, 5) After the fifth year, the security pays some constant cash flow at the end of the nextfour years (t-6, 7, 8, 9) Ten years from now (t-10) the security will mature and pay $10,000. The security sells for $30,000 and promises a rate of return of 6%. What annual cash flow does the securpay for years 6 through 97Multiple Choice

The valuation of securities is based on the concept of time value of money. Thus the value of a…

A ten-year security pays cash flows of $1,000 a year at the end of each of the next five years four years t-6, 7, 8, 9) Ten years from now 10) the security will mature and pay $10,000 pay for years 6 through 97 -1,2,3,4,5) After the fifth year, the security pays some constant cash flow at the end of the next The security sells for $30,000 and promises a rate of retum of 6% What annual cash flow does the seco

A ten-year security pays cash flows of $1,000 a year at the end of each of the next five years four years t-6, 7, 8, 9) Ten years from now 10) the security will mature and pay $10,000 pay for years 6 through 97 -1,2,3,4,5) After the fifth year, the security pays some constant cash flow at the end of the next The security sells for $30,000 and promises a rate of retum of 6% What annual cash flow does the seco

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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Similar questions

A 5-year annuity of ten $50,000 semi-annual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 12% per annum compounded monthly: A. What is the value of the annuity 5 years from now? B. What is the current value of the annuity?
contract would you prefer? 4. What are the present values of the following cash flows? A. $1,000 to be received in 8 years if the discount rate is 5 percent. B. $35 a year for 7 years compounded annually at 7 percent. C. a $100 perpetuity discounted at 9 percent.
A $6,000,000 apartment complex loan is to be paid off in 10 years by making 10 equal annual payments. How much is each payment if the interest rate is 7.5% compounded annually? (a) State the type. ordinary annuity sinking fund amortization present value of an annuity present value (b) Answer the question. (Round your answer to the nearest cent.)
How much do you have to deposit today so that beginning 11 years from now you can withdraw $12,000 a year for the next 6 years (periods 11 through 16) plus an additional amount of $24,000 in the last year (period 16)? Assume an interest rate of 9 percent.
A royalty contract promises a $500,000 sign-up bonus; ten annual royalty payments, starting with $250,000, next year then growing at a rate of 6.5%; and a final bonus (in year ten, together with the last regular payment) of $800,000. If the appropriate discount rate is 10.8%, what is the value of all the payments if this royalty contract is signed today? Use the annuity formula in some of your calculations!
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
A security pays $800 every 8 years forever. The appropriate discount rate is 2% (EAR). What is the value of the security if the first payment occurs 5 years from now?
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
What is the present value of a $1,000 annuity for 10 years, with the first payment occurring at the end of year 10 (that is, ten $1,000 payments occur- ring at the end of year 10 through vear 19). given a discount rate of 10 percent?
You build a retirement fund by continuously paying into the fund for 30 years, at a rate of 5,000 per year at an effective annual interest rate of 9%. After 30 years, you buy a 30-year annuity immediate with your fund at an effective annual interest rate of 8%. The annuity pays P after one year, and payments increase by 5% thereafter. Find P
A 10-year annuity of $5,000 annual payments begins in 6 years. The discount rate is 10%, compounded annually. What is its value today? What is its value in 7 years?
A security pays you an annual amount of $900 for 10 years. The seller of the security requires the first payment to be made today and the last payment to be made 9 years from today. Interest rate on this security is 5.75 percent per annum. Calculate the present value rounded to 2 decimal places.

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