Annuity : Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time. Present Value Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows. To Calculate: Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Question

Want to see the full answer?

Answer 1

Question

Chapter 5, Problem 12P

Summary Introduction

Annuity:

Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time.

Present Value

Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows.

To Calculate:

Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 2

Question

Chapter 5, Problem 12P

Summary Introduction

Annuity:

Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time.

Present Value

Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows.

To Calculate:

Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 5, Problem 12P

Summary Introduction

Annuity:

Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time.

Present Value

Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows.

To Calculate:

Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 5, Problem 12P

Summary Introduction

Annuity:

Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time.

Present Value

Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows.

To Calculate:

Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 5, Problem 12P

Summary Introduction

Annuity:

Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time.

Present Value

Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows.

To Calculate:

Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Answer 6

Chapter 5, Problem 12P

Summary Introduction

Annuity:

Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time.

Present Value

Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows.

To Calculate:

Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Answer 7

Chapter 5, Problem 12P

Summary Introduction

Annuity:

Annuity is the periodical payments of predetermined sum based on the interest rate as per the contract between two parties. It is paid at fixed time intervals (usually every month). Each periodic payment consist Interest on outstanding principal and some part of principal. Initially, the portion of interest in the annuity is higher than the principal but the Interest part keeps decreasing and principal part keeps increasing over the time.

Present Value

Present value is the total sum of all the future cash flows, discounted on a given interest rate. The concept of Present value is helpful to analyze a project’s finance viability. All the future cash flows are discounted at the rate of interest for the given period and the total of all those discounted values is the present value of those cash flows.

To Calculate:

Present value of eight annuities of $10000 each discounted at the rate of 4%, Payable after every six months.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 5 - Prob. 1CC Ch. 5 - Prob. 2CC Ch. 5 - Prob. 3CC Ch. 5 - Prob. 4CC Ch. 5 - What is the difference between a nominal and real...Ch. 5 - How are interest rates and the level of investment...Ch. 5 - Prob. 7CC Ch. 5 - Prob. 8CC Ch. 5 - Prob. 1CT Ch. 5 - Why is the EAR for 6% APR, with semiannual...

Concept explainers

Want to see the full answer?

Chapter 5 Solutions