a) you want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. What is maximum price you would willing to pay for the annuity b) Find the future value of amount 100 if interest rate is 10% and number of years is 10

a) you want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. What is maximum price you would willing to pay for the annuity b) Find the future value of amount 100 if interest rate is 10% and number of years is 10

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 7Q

See similar textbooks

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
● An investment will provide you with $100 at the end of each year for the next 10 years. What is the present value of that annuity if the discount rate is 8% annually? • What is the present value of the above if the payments are received at the beginning of each year? • If you deposit those payments into an account earning 8%, what will the future value be in 10 years? • What will the future value be if you open the account with $1,000 today, and then make the $100 deposits at the end of each year?
Perpetuity Annuity A) You are considering an annuity which costs $100,000 today. The annuity pays $8,000 a year at an annual interest rate of 5.5 percent. What is the length of the annuity time period? You are considering an investment that will pay you $75,000 semi-annually for 5 years. Assuming you require a minimum rate of return of 8.75 percent, what is the most you are willing to pay for this investment? Assuming a discount rate of 6%, what is the future value of 100,000 per year for 12 years if the payments occur at the beginning of each period? Assuming a required return of 5.5%, how much would you be willing to pay for an investment that pays you and your heirs $50,000 per year in perpetuity? What is the present value of $7,500 per year, at a discount rate of 8.5 percent, if the first payment is received 10 years from now and the last payment is received 25 years from now? You have signed up for your 401k and will deposit $750 into your 401k when you are paid at the end of each…
You want to buy an ordinary annuity that will pay you P4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to * Your answer
You are considering purchasing an annuity that would pay you $1,000 per year for 10 years. The interest rate is 5%. Out of the choices below, what would be an reasonable price to pay for that annuity? Question options: a $8,200 b $9,100 c $7,600 d $10,000
Suppose you are going to receive $13,500 per year for five years. The interest rate is 8.4%a. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due?b. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are annuity due?c. Which has the highest present value (future value), the ordinary annuity or annuity due?
Suppose you are going to receive $13,000 per year for 7 years. The appropriate interest rate is 8 percent. a.What is the present value of the payments if they are in the form of an ordinary annuity? b.What is the present value if the payments are an annuity due? c.Suppose you plan to invest the payments for 7 years, what is the future value if the payments are an ordinary annuity? d.Suppose you plan to invest the payments for 7 years, what is the future value if the payments are an annuity due?
You have an annuity that pays $15 per year for 61 years. What is the future value (FV) of this annuity at the end of that 61 years given that the discount rate is 10%? Must use excel or finance calculator m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV
1- If you invested $10,000 in an investment account and you expect it to double in 4 years, what interest rate must it earn? 2-What is the future value of a 5-year ordinary annuity of $1000 if the appropriate interest rate is 5%? What is the present value of the annuity?
A You are considering investing in a security that will pay you $1000 in 30 years. If the appropriate discount rate is 10%, what is the present value of this investment? Assume these investments sell for $365, in return for which you receive $1000 in 30 years, what is the rate of return investors earn on this investment if they buy it for $365? b What is the accumulated sum of each of the following streams of ordinary annuity payments? $35 per half-year for three and a half years at 14% p.a. compounded half- yearly. $25 a year for three years compounded annually at 2%. $500 a year for 10 years compounded annually at 5%
How much should you pay today for a 10 year annuity that will provide annual payments of $10,000? Assume an interest rate of 4%. PLEASE BREAK IT DOWN
4) Suppose you will receive OMR 1 each year for the 3 coming year the Interest Rate is 10% Question: a. What is the Future Value of those payments?