Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
What would you pay for an investment that pays you $30,000 at the beginning of each year for the next ten years? Assume that the relevant interest rate for this type of investment is 8%.
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Step 1: Introduction
Present value can be defined as how much is the worth of the future sum of money at present provided a specific rate of return. The concept of present value is based on the principle that the value of a sum of money will not be similar to the value of that sum of money in the future.
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- 9. Assume you are planning to invest OMR5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity if your first OMR5,000 is invested at the end of the first year.arrow_forwardYou are valuing an investment that will pay you $26,000 per year for the first 4 years, $36,000 per year the next 11 years, $49,000 per year the next 17 years, and $45,000 per year the following 10 years (all payments are at the end of each year). If the appropriate annual discount rate is 6.00%, what is the value of the investment to you today?arrow_forwardIf you take out an amortized loan of $33,000 with a 14 year term and 7.4% interest rate, what are the annual payments you need to make? Round to the nearest dollar.arrow_forward
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