Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- You buy an annuity that will pay you $24,000 a year for 25 years. What is the value of this annuity today if the discount rate is 8.5 percent?arrow_forwardYou are offered an annuity that will pay $11,000 per year for 24 years (the first payment will occur one year from today). If you feel that the appropriate discount rate is 12%, what is the annuity worth to you today? $914,490.09 $1.299,707.65 $95,902.77 $1,455,672.57 $85.627.47 You are told that if you invest $10,900 per year for 12 years (all payments made at the end of each year) you will have accumulated $670,000 at the end of the period. What annual rate of return is the investment offering? 29.99% 23.63% 20.63% 26.99% 33.44%arrow_forwardYou are offered an annuity that will pay $10,000 a year for ten years (that is, ten payments), but the payments start after five years have elapsed. If you want to earn 8 percent on your funds, what is the maximum you should pay for this annuity? Show formula and all workingarrow_forward
- Assume that you contribute $280 per month to a retirement plan for 25 years. Then you are able to increase the contribution to $480 per month for the next 25 years. Given a 7.2 percent interest rate, what is the value of your retirement plan after the 50 years? Note: Do not round intermediate calculations and round your final answer to 2 decimal places.arrow_forwardWhat's the future value of a 12%, 5-year ordinary annuity that pays $700 each year? If this was an annuity due, what would its future value be? Round your answers to the nearest cent.arrow_forwardYour uncle is about to retire, and he wants to buy an annuity that will provide him with $7,100 of income a year for 15 years, with the first payment coming immediately. The going rate on such annuities is 15.25%. How much would it cost him to buy the annuity today?Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.arrow_forward
- Suppose that you have inherited an annuity that will initially pay $1,755 six years from now. Each of the following 30 annual payments will be 3% larger than the prior payment. Assuming that the annual opportunity cost of capital is 7%, what is the value of this annuity today? Round your final answer to two decimals.arrow_forwardIf you are expecting a settlement of $10000 at the end of each year for five years, how much this annuity is worth today if the interest rate is 8%?arrow_forwardIf you put up $73,000 today in exchange for an annual 6.75 percent, 18-year annuity, what will the annual cash flow be?arrow_forward
- Suppose you save $500 per year at the end of each year for 15 years and earn 8.25% interest per year. What is the present value of this annuity? Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 8%. What is the value of this perpetuity?arrow_forwardAssume that you contribute $150 per month to a retirement plan for 20 years. Then you can increase the contribution to $258 per month for another 20 years, and finally, $408 per month for the last 10 years. Given a 7 percent interest rate, what is the value of your retirement plan after the 50 years?arrow_forwardYou buy an annuity, which will pay you $22,000 a year for twenty years. The payments are paid on the first day of each year. What is the value of this annuity today at a 8% discount rate?arrow_forward
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