Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 4, Problem 28QAP
Summary Introduction
To compute: The present value of the
Introduction: Investors invest in bonds to ensure regular income (interest income) on their investments. Bondholders are the investors who are risk averse.
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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. Round your answers to the nearest cent.
$800 per year for 10 years at 8%.
$400 per year for 5 years at 4%.
$800 per year for 5 years at 0%.
Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.
$800 per year for 10 years at 8%.
$400 per year for 5 years at 4%.
$800 per year for 5 years at 0%.
Annuity Present Values What is the present value of an annuity of $7,300 per year, with the first cash flow received 3 years from today and the last one received 30 years from today? Use a discount rate of 7 percent.
What is the present value of an annuity due of $10,000 per year, with the first cash flow received 5 years from today and the last one received 8 years from today? Use a discount rate of 5%.
Chapter 4 Solutions
Corporate Finance
Ch. 4 - Prob. 1CQCh. 4 - Prob. 2CQCh. 4 - Prob. 3CQCh. 4 - Prob. 4CQCh. 4 - Time Value On subsidized Stafford loans, a common...Ch. 4 - Prob. 6CQCh. 4 - Prob. 7CQCh. 4 - Prob. 8CQCh. 4 - Prob. 9CQCh. 4 - Prob. 10CQ
Ch. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Prob. 2QAPCh. 4 - Prob. 3QAPCh. 4 - Calculating Interest Rates Solve for the unknown...Ch. 4 - Prob. 5QAPCh. 4 - Prob. 6QAPCh. 4 - Prob. 7QAPCh. 4 - Calculating Rates of Return Although appealing to...Ch. 4 - Prob. 9QAPCh. 4 - Prob. 10QAPCh. 4 - Present Value and Multiple Cash Flows Specter Co....Ch. 4 - Prob. 12QAPCh. 4 - Calculating Annuity Present Value An investment...Ch. 4 - Prob. 14QAPCh. 4 - Prob. 15QAPCh. 4 - Prob. 16QAPCh. 4 - Calculating EAR First National Bank charges 11.4...Ch. 4 - Prob. 18QAPCh. 4 - Calculating Number of Periods One of your...Ch. 4 - Prob. 20QAPCh. 4 - Prob. 21QAPCh. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Calculating Annuities You are planning to save for...Ch. 4 - Prob. 24QAPCh. 4 - Prob. 25QAPCh. 4 - Prob. 26QAPCh. 4 - Prob. 27QAPCh. 4 - Prob. 28QAPCh. 4 - Prob. 29QAPCh. 4 - Prob. 30QAPCh. 4 - Calculating Interest Expense You receive a credit...Ch. 4 - Prob. 32QAPCh. 4 - Growing Annuity Southern California Publishing...Ch. 4 - Prob. 34QAPCh. 4 - Prob. 35QAPCh. 4 - Prob. 36QAPCh. 4 - Prob. 37QAPCh. 4 - Calculating Loan Payments You need a 30-year...Ch. 4 - Prob. 39QAPCh. 4 - Prob. 40QAPCh. 4 - Prob. 41QAPCh. 4 - Prob. 42QAPCh. 4 - Prob. 43QAPCh. 4 - Prob. 44QAPCh. 4 - Prob. 45QAPCh. 4 - Prob. 46QAPCh. 4 - Prob. 47QAPCh. 4 - Prob. 48QAPCh. 4 - Prob. 49QAPCh. 4 - Prob. 50QAPCh. 4 - Prob. 51QAPCh. 4 - Prob. 52QAPCh. 4 - Prob. 53QAPCh. 4 - Prob. 54QAPCh. 4 - Prob. 55QAPCh. 4 - Prob. 56QAPCh. 4 - Prob. 57QAPCh. 4 - Prob. 58QAPCh. 4 - Prob. 59QAPCh. 4 - Prob. 60QAPCh. 4 - Prob. 61QAPCh. 4 - Prob. 62QAPCh. 4 - Prob. 63QAPCh. 4 - Prob. 64QAPCh. 4 - Prob. 65QAPCh. 4 - Prob. 66QAPCh. 4 - Prob. 67QAPCh. 4 - Prob. 68QAPCh. 4 - Prob. 69QAPCh. 4 - Prob. 70QAPCh. 4 - Prob. 71QAPCh. 4 - Prob. 72QAPCh. 4 - Prob. 73QAPCh. 4 - Prob. 74QAPCh. 4 - Rule or 69.3 A corollary to the Rule of 72 is the...Ch. 4 - Prob. 1MCCh. 4 - Prob. 2MCCh. 4 - Prob. 3MCCh. 4 - Prob. 4MCCh. 4 - Prob. 5MC
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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
- You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuityarrow_forwardCalculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?arrow_forwardPresent Value of an Annuity. Find the present values of these ordinary annuities. Discounting occurs once a year. A) $600 per year for 12 years at 8% B) $300 per year for 6 years at 4% C) $500 per year for 6 years at 0% D) rework parts a,b, and c assuming they are annuities due. please show steps. Thank you.arrow_forward
- Future Value of an Annuity Calculate the future value. Present Value Interest Rate $0.00 10% monthly Payments $475.00 monthly Number of Payments per Year: PY= a. Determine the annuity type. O Ordinary Simple Annuity O Ordinary General Annuity O Simple Annuity Due O General Annuity Due b. Identify the following pieces of information to be used to calculate the future value of the annuity. Periodic Payment: PMT Total Number of Payments: N= Annual Interest Rate: r = Number of Compoundings per Year: CY c. Determine the future value of the annuity. Timing of Payment Years End 19 = Future Value ???arrow_forwardFind the future value of an annuity due with an annual payment of $14,000 for three years at 4% annual interest using the simple interest formula. How much was invested? How much interest was earned? What is the future value of the annuity? $ (Round to the nearest cent as needed.) How much was invested? S How much interest was earned? S (Round to the nearest cent as needed.) ←arrow_forwardAn annuity pays $54 per year for 28 years. What is the future value (FV) of this annuity at the end of those 28 years, given that the discount rate is 8%? A. $5,148.30 B. $7,207.62 C. $6,177.96 D. $3,088.98arrow_forward
- Find the present value of an annuity stream in which the first payment of $268 is received 8 years from today, and thereafter 8 additional payments are paid to you each year. The size of the annuity payments will decrease in size in each year (i.e. g < 0), at an annual rate of g = -4.5%. Use an annual discount rate of 3.1%.arrow_forwardCalculate the future value. Present Value Interest Rate $0.00 8% monthly Payments $500.00 monthly Timing of Payment Years End Future Value 24 ??? a. Determine the annuity type. Ordinary Simple Annuity Ordinary General Annuity O Simple Annuity Due General Annuity Due b. Identify the following pieces of information to be used to calculate the future value of the annuity. Periodic Payment: PMT = Number of Payments per Year: PY = Total Number of Payments: N = Annual Interest Rate: r = = Number of Compoundings per Year: CY = c. Determine the future value of the annuity.arrow_forwardPresent Value of an Annuity Due If the present value of an ordinary, 5-year annuity is $6,200 and interest rates are 13 percent, what's the present value of the same annuity due?arrow_forward
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