Find the NPV and PI of an annuity that pays $500 per year for eight years and costs $2,500. Assume a discount rate of 6%. Show the calculations.

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A:

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A: Given details are : Perpetuity amount = $500 Market Interest rate = 6% We need to compute the…

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A: Information Provided: Monthly annuity payment = $400 Table factor (Ordinary Annuity) = 21.67568…

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Q: 1 2 3 5 Year 6 Cash flow, ID 200 200 200 200 200 300 300

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: What’s the present value of a perpetuity that pays $1500 per year if the appropriate  interest rate…

A: Cash flow per year is $1500 The interest rate is 15% To Find: the present value of a perpetuity

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A: PMT = $5000r =0.10n=8PV of ordinary annuity=?PV of annuity due=?

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A:

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

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Q: Suppose you have an opportunity to buy an annuity that pays $3,500 at the end of each year for 6…

A: Present Value of Annuity=Annuity×1-11+ratetimerate

Q: 1. If you receive $29 each quarter for 19 years and the discount rate is 0.05, what is the present…

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.