How much more is a perpetuity of $800 worth than an annuity of the same amount...
How much more is a perpetuity of $800 worth than an annuity of the same amount for 38 years? Assume an annual interest rate of 12% and cash flows at the end of each period. Given annual compounding.
a.)$98.86
b.)$89.87
c.)$85.38
d.)$92.57
Homework Answers
Present value of perpetuity=Annual cash flows/interest rate
=800/0.12
=$6666.67(Approx)
Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=800[1-(1.12)^-38]/0.12
=800*8.22099347
=$6576.79(Approx)
Hence difference=6666.67-6576.79
=$89.87(Approx)
Add Answer to:
How much more is a perpetuity of $800 worth than an annuity of
the same amount...
Which of the following is NOT correct? Multiple Choice If market value of equity of a...
Which of the following is NOT correct? Multiple Choice If market value of equity of a corporation is the only information you know, you cannot determine its book value of equity. When it comes to compound interest, interest earned in each period is actually increasing over time/ Simple interest means that interest earned in this peirod is the same as the interest earned in next period. O Pension payment and mortgage payment are examples of perpetuity, How much more is...
How much more is an annuity of $12,000 annually for 10 years with an interest of...
How much more is an annuity of $12,000 annually for 10 years with an interest of 6% than a perpetuity of $8,000 at the same rate?
Problem 4: How much will an annuity due of S950 per year be worth in eight...
Problem 4: How much will an annuity due of S950 per year be worth in eight years at an annual interest rate of 8 percent? Problem 5: You wil be receiving $25,000 at the end of each year for the next 20 years. If the correct discount rate for such a stream of cash flows is 10% then what is the present value of the cash flows?
8. How much more is an annuity of $12,000 annually for 10 years with an interest...
8. How much more is an annuity of $12,000 annually for 10 years with an interest of 6% than a perpetuity of $8,000 at the same rate?
How much more money is required to fund an ordinary perpetuity than a 35-year ordinary annuity,...
How much more money is required to fund an ordinary perpetuity than a 35-year ordinary annuity, if the funds can earn 6% compounded quarterly, and both pay $800 monthly? (Do not round intermediate calculations and round your final answer to 2 decimal places.) $ more money is needed to fund the perpetuity
Which of the following statements is true? A given present value will result in a higher...
Which of the following statements is true? A given present value will result in a higher future value if annual compounding is used rather than monthly compounding, Effective Annual Rate is greater than Annual Percentage Rate when annual compounding is used. ОО A perpetuity with the cash flow starting two years from now will have the same present value as a perpetuity with the same cash flow starting a year from now. A group of cash flows of the same...
How much more money is required to fund an ordinary perpetuity than a 15-year ordinary annuity,...
How much more money is required to fund an ordinary perpetuity than a 15-year ordinary annuity, if the funds can earn 5% compounded quarterly, and both pay $600 monthly? (Do not round intermediate calculations and round your final answer to 2 decimal places.) $ more money is needed to fund the perpetuity PLEASE IM EXPECTING A CORRECT ANSWER FROM YOU
QUESTION 15 Cameron is going to receive an annuity for 30 years of $33.951, and Kennedy...
QUESTION 15 Cameron is going to receive an annuity for 30 years of $33.951, and Kennedy is going to receive a perpetuity of that same amount. If the appropriate discount rate is 6%, how much more are Kennedy's cash flows worth today than Cameron's cash flows? (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
How much more money is required to fund an ordinary perpetuity than a 20-year ordinary annuity...
How much more money is required to fund an ordinary perpetuity than a 20-year ordinary annuity if both pay $5900 quarterly and money can earn 8% compounded quarterly? (Do not round intermediate calculations and round your final answer to 2 decimal places.) $ more money is required
A perpetuity-due paying 5 every year has a present value of 90. An annuity-immediate paying 10...
A perpetuity-due paying 5 every year has a present value of 90. An annuity-immediate paying 10 monthly for 5 years has the same effective rate of interest what is the present value of this annuity? Hint: To calculate the monthly annuity, you should find the present value of a 60 payment annuity using the monthly effective rate of interest that is equivalent to to the annual effective rate of interest that you derived from the perpetuity. That is find i...
Which of the following is NOT correct? Multiple Choice If market value of equity of a corporation is the only information you know, you cannot determine its book value of equity. When it comes to compound interest, interest earned in each period is actually increasing over time/ Simple interest means that interest earned in this peirod is the same as the interest earned in next period. O Pension payment and mortgage payment are examples of perpetuity, How much more is...
Problem 4: How much will an annuity due of S950 per year be worth in eight years at an annual interest rate of 8 percent? Problem 5: You wil be receiving $25,000 at the end of each year for the next 20 years. If the correct discount rate for such a stream of cash flows is 10% then what is the present value of the cash flows?
How much more money is required to fund an ordinary perpetuity than a 35-year ordinary annuity, if the funds can earn 6% compounded quarterly, and both pay $800 monthly? (Do not round intermediate calculations and round your final answer to 2 decimal places.) $ more money is needed to fund the perpetuity
Which of the following statements is true? A given present value will result in a higher future value if annual compounding is used rather than monthly compounding, Effective Annual Rate is greater than Annual Percentage Rate when annual compounding is used. ОО A perpetuity with the cash flow starting two years from now will have the same present value as a perpetuity with the same cash flow starting a year from now. A group of cash flows of the same...
QUESTION 15 Cameron is going to receive an annuity for 30 years of $33.951, and Kennedy is going to receive a perpetuity of that same amount. If the appropriate discount rate is 6%, how much more are Kennedy's cash flows worth today than Cameron's cash flows? (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago