Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 5, Problem 22SP
Summary Introduction
To determine: The present value of an
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Present
value of an
annuity)
What is the present value of the following annuities?
a.
$2,400
a year for
10
years discounted back to the present at
11
percent.
b.
$90
a year for
3
years discounted back to the present at
9
percent.
c.
$290
a year for
12
years discounted back to the present at
12
percent.
d.
$500
a year for
6
years discounted back to the present at
5
percent.
a. What is the present value of
$2,400
a year for
10
years discounted back to the present at
11
percent?
$nothing
(Round to the nearest cent.)
Present 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.
(Compound annuity) What is the accumulation sum of the following streams of payments?
a.$500 a yera for 10 years compounded annually at 5 percent
b.$100 a year for 5 years compounded annually at 10 percent
c.$35 a year for 7 years compounded annually at 7 percent
d.$25 a year for 3 years compounded annually at 2 percent
Chapter 5 Solutions
Foundations Of Finance
Ch. 5 - Prob. 1RQCh. 5 - The processes of discounting and compounding are...Ch. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 1SPCh. 5 - Prob. 2SPCh. 5 - Prob. 3SPCh. 5 - Prob. 4SPCh. 5 - Prob. 5SP
Ch. 5 - (Compound value) Stanford Simmons, who recently...Ch. 5 - (Future value) Sarah Wiggum would like to make a...Ch. 5 - Prob. 8SPCh. 5 - (Future value) Giancarlo Stanton hit 59 home runs...Ch. 5 - Prob. 10SPCh. 5 - Prob. 11SPCh. 5 - Prob. 12SPCh. 5 - Prob. 13SPCh. 5 - Prob. 14SPCh. 5 - Prob. 15SPCh. 5 - Prob. 16SPCh. 5 - Prob. 17SPCh. 5 - Prob. 18SPCh. 5 - Prob. 19SPCh. 5 - Prob. 20SPCh. 5 - Prob. 21SPCh. 5 - Prob. 22SPCh. 5 - Prob. 23SPCh. 5 - Prob. 24SPCh. 5 - (Solving for PMT of an annuity) To pay for your...Ch. 5 - Prob. 26SPCh. 5 - Prob. 27SPCh. 5 - (Loan amortization) On December 31, Beth Klemkosky...Ch. 5 - (Solving for r of an annuity) You lend a friend...Ch. 5 - Prob. 30SPCh. 5 - (Compound annuity) You plan on buying some...Ch. 5 - (Loan amortization) On December 31, Son-Nan Chen...Ch. 5 - (Loan amortization) To buy a new house you must...Ch. 5 - Prob. 34SPCh. 5 - Prob. 35SPCh. 5 - Prob. 36SPCh. 5 - Prob. 37SPCh. 5 - Prob. 38SPCh. 5 - (Compound interest uith nonannnal periods) a....Ch. 5 - (Compound interest with nonannual periods) After...Ch. 5 - Prob. 41SPCh. 5 - (Spreadsheet problem) To buy a new house you take...Ch. 5 - (Nonannual compounding using a calculator) Jesse...Ch. 5 - (Nonannual compounding using a calculator)...Ch. 5 - (Nonannual compounding using a calculator) Fords...Ch. 5 - Prob. 46SPCh. 5 - (Nonannual compounding using a calculator) Dennis...Ch. 5 - Prob. 48SPCh. 5 - (Calculating the effective annual rate) Youve just...Ch. 5 - Prob. 50SPCh. 5 - Prob. 51SPCh. 5 - (Present value) The Kumar Corporation is planning...Ch. 5 - (Perpetuities) What is the present value of the...Ch. 5 - (Complex present value) How much do you have to...Ch. 5 - (Complex present value) You would like to have...Ch. 5 - Prob. 56SPCh. 5 - Prob. 57SPCh. 5 - Prob. 58SPCh. 5 - Prob. 59SPCh. 5 - (Present value of a complex stream) Don Draper has...Ch. 5 - (Present value of a complex stream) Don Draper has...Ch. 5 - (Complex stream of cash flows) Roger Sterling has...Ch. 5 - (Future and present value using a calculator) In...Ch. 5 - Prob. 1MCCh. 5 - Prob. 2MCCh. 5 - Prob. 3MCCh. 5 - Prob. 4MCCh. 5 - Prob. 5MCCh. 5 - Prob. 6MCCh. 5 - Prob. 7MCCh. 5 - Prob. 8MCCh. 5 - Prob. 9MCCh. 5 - Prob. 10MCCh. 5 - Prob. 11MC
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- What is the present value of an ordinary annuity that pays $1,000 per year for 4 years, assuming the annual discount rate is 7 percent? a. $3,051.58 b. $762.90 c. $3,624.32 d. $3,738.32 e. $3,387.21arrow_forward(Compound annuity) What is the accumulated sum of each of the following streams of payments? a. $500 a year for 10 years compounded annually at 10 percent. b. $112 a year for 6 years compounded annually at 8 percent.arrow_forwardAn annuity pays $12 per year for 47 years. What is the future value (FV) of this annuity at the end of that 47 years given that the discount rate is 7%? A. $3,950.69 B. $2,370.41 C. $5,530.97 D. $4,740.83arrow_forward
- 3.) Find the present value of an annuity in perpetuity where payments are $1, 000 at the beginning of the first year, third year, etc. and payments are $1, 500 at the beginning of the second year, fourth year, etc. Here effective annual interest is 5%arrow_forwardK (Present value of an annuity due) Determine the present value of an annuity due of $2,000 per year for 25 years discounted back to the present at an annual rate of 6 percent. What would be the present value of this annuity due if it were discounted at an annual rate of 11 percent? CELE (Round to the nearest cent.) $(Round to the nearest cent.) a. If the annual discount rate is 6 percent, the present value of the annuity due is $ b. If the annual discount rate is 11 percent, the present value of the annuity due is:arrow_forward5. Future Value of an Annuity The table below contains information on four different annuities. a) Calculate the future value of each annuity if it is i) An ordinary annuity ii) An annuity due b) Compare your findings. All else being identical, which type of annuity-ordinary annuity or annuity due—is preferable? Why? Part Annual CF Interest Rate Deposit Period (Years) A $1,000 B $1,200 C $6,000 D $20,000 3% 6% 8% 12% 5825 12 15arrow_forward
- A ten-year annuity has an interest rate of 12% with individual cash flows of $150 at every end of the year. What is the present value of the annuity? Select one: a. $ 56.50 b. $ 756.78 c. $ 48.30 d. $ 847.53arrow_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_forwardd. Calculate the future sum of $1,000, given that it will be held in the bank for 5 years earning an APR of 10 percent compounded semiannually. e What is an annuity due? How does this differ from an ordinary annuity? f. What is the present value of an ordinary annuity of $1,000 per year for 7 years discounted back to the present at 10 percent? What would be the present value if it were an annuity due?arrow_forward
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