Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Related questions
Question
Suppose you are going to receive $12,700 per year for six years. The appropriate interest rate is 7.6 percent.
a-1. What is the present value of the payments if they are in the form of an ordinary annuity ? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
a-2.What is the present value if the payments are an annuity due? (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 six years. What is the future value if the payments are an ordinary annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b-2. Suppose you plan to invest the payments for six years. What is the future value if the payments are an annuity due? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- 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..arrow_forwardUse a calculator to evaluate an ordinary annuity formula 1 +4 nt - 1 A = m for m, r, and t (respectively). Assume monthly payments. (Round your answer to the nearest cent.) $50; 5%; 8 yr A = $arrow_forwardCalculate the present value of the following annuities, assuming each annuity payment is made at the end of each compounding period. (FV of $1. PV of $1. FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) 1. 2. 3. Annuity Payment $ 5,600 10,600 4,600 Annual Rate Interest Compounded Semiannually 9.0% 10.0% Quarterly 11.0% Annually Period Invested 3 years 2 years 5 years Present Value of Annuityarrow_forward
- 1. What is the different between an ordinary annuity and an annuity due? Which occursmore in practice? Give a common example of both. 2. Using the example of a savings account, explain the difference between the effectiveannual rate and the annual percentage rate. 3. A mortgage instrument pays $1.5 million at the end of each of the next two years. Aninvestor has an alternative investment with the same amount of risk that will payinterest at 8% compounded semiannually. what the investor should pay for themortgage instrument?arrow_forward2 Given a set of present value tables, an annual interest rate, the dollar amount of equal payments made, and the number of semiannual payments, what other information is necessary to calculate the present value of the series of payments? A. The future value of the annuity. B. The timing of the payments (whether they are at the beginning or end of the period). C. The rate of inflation. D. No other information is required.arrow_forwardWhich of the following is false? The future value of a deferred annuity is equal to the future value of an annuity not deferred. If the first payment is received at the end of the fifth period, it means the ordinary annuity is deferred for five periods. The present value of a deferred annuity is less than the present value of an annuity not deferred. To calculate the present value of a deferred annuity, determine the present value of an ordinary annuity for the entire period and subtract the present value of the payments which were not received during the deferral period.arrow_forward
- If the present value of an ordinary, 6-year annuity is $6400 and interest rates are 2.5 percent, what’s the present value of the same annuity due? (Round your answer to 2 decimal places.) Present value $arrow_forwardK Find the future value of the ordinary annuity. Interest is compounded annually. R=24,000; i = 0.045; n=38 The future value of the ordinary annuity is $ (Do not round until the final answer. Then round to the nearest dollar as needed.)arrow_forwardPlease use a physical TIMELINE to solve.arrow_forward
- Use a calculator to evaluate an ordinary annuity formula nt - 1 1 + - A = m n for m, r, and t (respectively). Assume monthly payments. (Round your answer to the nearest cent.) $100; 7%; 10 yr A = $arrow_forwardFind the following values assuming a regular, or ordinary, annuity: a. The present value of $400 per year for ten years at 10 percent. b. The future value of $400 per year for ten years at 10 percent. c. The present value of $200 per year for five years at 5 percent.d. The future value of $200 per year for five years at 5 percent.Repeat Problem above but assume the annuities are annuities due.(Dollar signs, decimal places, and commas all matter)arrow_forwardUse a calculator to evaluate an ordinary annuity formula for m, r, and t (respectively). Assume monthly payments. (Round your answer to the nearest cent.) $20; 4%; 30 yr A = $arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education