Abe Washington sold some property in Oregon and will receive $40,000 in 5 equal payments of $8,000 at the end of each year from today. What is the present value of these future payments at an interest rate of 9% compounded annually?
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Abe Washington sold some property in Oregon and will receive $40,000 in 5 equal payments of $8,000 at the end of each year from today.
What is the present value of these future payments at an interest rate of 9% compounded annually?
Round answer to the nearest dollar.
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Solved in 3 steps
- 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 annuityAbe Washington sold some property in Oregon and will receive $40,000 in 5 equal payments of $8,000 at the end of each year from today. What is the present value of these future payments at an interest rate of 9% compounded annually? Round answer to the nearest dollar. show in excel if possibleHank made payments of $106 per month at the end of each month for 30 years to purchase a piece of property. He promptly sold it for $99,810. What annual interest rate would he need to earn on an ordinary annuity for a comparable rate of return? ◻️٪ (Round to the nearest hundredth as needed.)
- A friend who owns a perpetuity that promises to pay $1,000 at the end of each year, forever, comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,001. At an interest rate of 10%, should you pay the $1,000 today to receive payment numbers 26 and onwards? What does this suggest to you about the value of perpetual payments?2. A friend who owns a perpetuity that promises to pay $1,000 at the end of each year,forever, comes to you and offers to sell you all of the payments to be received after the25th year for a price of $1,000. At an interest rate of 10%, should you pay the $1,000today to receive payment numbers 26 and onwards? What does this suggest to youabout the value of perpetual payments?Hank made payments of $205 per month at the end of each month for 30 years to purchase a piece of property. He promptly sold it for $175,751. What annual interest rate would he need to earn on an ordinary annuity for a comparable rate of return? (Answer should be a percentage rounded to the nearest hundredth as needed)
- 11) Max purchases a lot for $300,000. Max will pay $25,000 dollars at the end of each year. the interest rate is 4% compounded annually, how many full payments must be made? a) what will be the size of the payment one year after the last full payment?An aunt gifts you with $12,000, but only after you invest it for one year. She givesyou two choices.1. Invest the entire sum at 4.2% compounded monthly.2. Invest $1000 at 7.1% each month in an annuity that pays every month.(a) What is the future value of the money invested with method 1?(b) How much interest is earned with method 1?(c) What is the future value of the money invested with method 2?(d) How much interest is earned with method 2?(e) Which method would you choose?4. Mr. Thomas will receive $8,500 a year for the next 15 years from her trust. If a 7 percent interest rate is applied, what is the current value of the future payments if first receipt occurs today?
- Ken Francis is offered the possibility of investing $2,745 today; in return, he would receive $10,000 after 15 years. What is the annual rate of interest for this investment?Mick Mitchell wishes to have $120,000 in seven years. If he can earn annual interest of 12%, how much must he invest today? Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of S1 table.) (Click the icon to view Present Value of S1 table.) (Click the icon to view Future Value of S1 table.) OA. $265,320 В. $1,210 OC $54,240 OD. S111,960A man can sell his business for $800,000 cash or for $125,000 plus $12'I a. Find the present value of the annuity that is offered if money is worth 10%; compounded annually. b. If he takes the $800,000, spends $125,000 of it, and invests the rest in a 9-year annuity at 10%, compounded annually, what size annuity payment will he receive at the end of each year? c. Which is better, taking the $125,000 and the annuity or taking the cash settlement? a. Find the present value of the annuity that is offered if money is worth 10%, compounded annually. (Type an integer or decimal rounded to the nearest cent as needed.)