Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
An investment offers $9,200 per year for 17 years, with the first payment occurring one year from now. Assume the required return is 12 percent. |
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a. |
What is the value of the investment today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | What would the value be if the payments occurred for 42 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
c. | What would the value be if the payments occurred for 77 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
d. | What would the value be if the payments occurred forever? (Do not round |
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Step 1
STEP 1
Given a specific rate of return or discount rate, an annuity's present value (PV) is the current worth of its expected future payments.
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