Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply. The value of a perpetuity cannot be determined. A perpetuity is a stream of regularly timed, equal cash flows that continues forever. The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value of its more distant (in the future) cash flows. A perpetuity is a stream of unequal cash flows. A local bank's advertising reads: "Give us $45,000 today, and we'll pay you $800 every year forever." If you plan to live forever, what annual interest rate will you earn on your deposit? 2.49% 1.78% O 1.42% O2.14% Oops! When you went in to make your deposit, the bank representative said the amount of required deposit reported in the advertisement was the interest rate earned on your deposited funds, will adjust your incorrect and should have read $67,500. This revision, which will earned interest rate to

Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply. The value of a perpetuity cannot be determined. A perpetuity is a stream of regularly timed, equal cash flows that continues forever. The current value of a perpetuity is based more on the discounted value of its nearer (in time) cash flows and less by the discounted value of its more distant (in the future) cash flows. A perpetuity is a stream of unequal cash flows. A local bank's advertising reads: "Give us $45,000 today, and we'll pay you $800 every year forever." If you plan to live forever, what annual interest rate will you earn on your deposit? 2.49% 1.78% O 1.42% O2.14% Oops! When you went in to make your deposit, the bank representative said the amount of required deposit reported in the advertisement was the interest rate earned on your deposited funds, will adjust your incorrect and should have read $67,500. This revision, which will earned interest rate to

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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Future Value of an Annuity Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press FV, and find the FV of the annuity due.) Do not round intermediate calculations. Round your answers to the nearest cent. $600 per year for 10 years at 14%. $ $300 per year for 5 years at 7%. $ $600 per year for 5 years at 0%. $ Now rework parts a, b, and c…
Show that the present value of annuaity due is one period accumulated value of the present value of annuity immediate.
Distinguish between the present value of $1 and the present value of an annuity due of $1.
Explain the relationship between Table 2, Present Value of $1, and Table 4, Present Value of an OrdinaryAnnuity of $1.
10. Perpetuities Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply. The present value of a perpetuity is calculated by dividing the amount of the payment by the investor's opportunity interest rate. A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue indefinitely into the future. ☐ A perpetuity continues for a fixed time period. In a perpetuity, returns-in the form of a series of identical cash flows-are earned. Your grandfather wants to establish a scholarship in his father's name at a local university and has stipulated that you will administer it. As you've committed to fund a $15,000 scholarship every year beginning one year from tomorrow, you'll want to set aside the money for the scholarship immediately. At tomorrow's meeting with your grandfather and the bank's…
What is the name given to a series of multiple, equal payments when each payments will occur at the end of its time period and when the payments are expected to occur forever?
3) How do you calculate (mathematically) the present value (PV) of a(n): (a) perpetuity (b) annuity (c) growing perpetuity (d) growing annuity
Future value of an annuity Using the values below, answer the questions that follow. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Amount of annuity $5,000 Interest rate 6% Deposit period (years) 7 a. Calculate the future value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due. b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity-ordinary or annuity due is preferable as an investment? Explain why.
Suppose you would like to invest your money for your future. You have three choices of funding agencies namely, FA 1, FA 2, and FA 3. Based on the given data below, compute for the future interest of each funding agency. What would you choose? Explain your answer. (Kindly explain your answer and put a step-by-step formula. I can't understand excel)
With a deferred ordinary annuity, the first payment was made one or more periods prior. the first payment begins one or more periods later. the last payment is made first. the first payment is made last.
Please answer them in a comprehensice and detailed manner with step-by-step algorithm. Reject any form of excel shhet's solution. Just do it manually.
A 5.66% annual coupon, 19-year bond has a yield to maturity of 4.14%. Assuming the par value is $1,000 and the YTM is expected not to change over the next year, what is the expected Current Yield for this bond? Please share your answer as a %.

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