Mary is going to receive a 38-year annuity of $10,300 per year. Nancy is going to receive a perpetuity of $10,300 per year. If the appropriate interest rate is 11 percent, how much more is Nancy's cash flow worth? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Present value

Mary is going to receive a 38-year annuity of $10,300 per year. Nancy is going to receive a perpetuity of $10,300 per year. If the appropriate interest rate is 11 percent, how much more is Nancy's cash flow worth? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Present value

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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Linda expects to receive P35,569.22 , 9 years from now. How much should she invests for three consecutive years (annually) starting THIS YEAR if the interest rate is 0.250? Use knowledge about ANNUITIES in solving this
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You would like to provide $113,000 a year forever for your heirs. How much money must you deposit today to fund this goal if you can earn a guaranteed 8.2 percent rate of return? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the future value of an 8%, 5-year ordinary annuity that pays $350 each year? Do not round intermediate calculations. Round your answer to the nearest cent. 2$ If this were an annuity due, what would its future value be? Do not round intermediate calculations. Round your answer to the nearest cent. $
Ay 3.
The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $24,000 per year forever. If the required return on this investment is 6.3 percent, how much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Use graphical approximation techniques or an equation solver to approximate the desired interest rate. A person makes annual payments of $1000 into an ordinary annuity. At the end of 5 years, the amount in the annuity is $5700.46. What annual nominal compounding rate has this annuity earned? Type the interest rate: % (Round to 2 decimal places.)
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Suppose you are going to receive $14,500 per year for five years. The appropriate interest rate is 8 percent. a-1. What is the present value of the payments if they are in the form of an ordinary annuity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a-2. What is the present value of the payments if the payments are an annuity due? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-1. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? Note: Do not round intermediate..
If you put up $51,000 today in exchange for a 6.25 percent, 15-year annuity, what will the annual cash flow be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A perpetuity of $1 each year, with the first payment due immediately, has a present value of $25 at an annual effective rate of i%. The owner exchanges it for another perpetuity with the first payment due immediately and subsequent payments due at two year intervals. What should the payment of the second perpetuity be, in order to keep the same interest rate, i%, and the same present value? A B с D E Less than $1.90 At least $1.90, but less than $1.94 At least $1.94, but less than $1.98 At least $1.98, but less than $2.02 $2.02 or more
Consider an inheritance that pays the beneficiary an annuity of $500 that begins immediately (an annuity due) and then annually in year 1 through year 17 (for a total of 18 years) with one exception - the payment in year 12, and only 12, is not $500 but $0. Using an interest rate of 3%, determine the present value of this cash flow stream.

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