A perpetuity is received via annual payments. The first payment, which will occur in 6 years,...
A perpetuity is received via annual payments. The first payment, which will occur in 6 years, will be for $1560, and the payments will increase by 4.6% each year after that. If the effective rate of interest is 7.3%, what is the present value of the perpetuity (6 years before the first payment)?
Homework Answers
Annuity Amount in 6 years = 1560
Growth rate 4.6% or 0.046
Effective rate of interest (i)= 7.3% or 0.073
Value of Perpetuity in 5th year = Annuity starting from 6th
year/(Interest - growth)
1560/(0.073-0.046)
=$57777.77778
So value of Perpetuity in 5th year is= 57777.77778
Present value = Future value/(1+i)^n
n = 5 years
Present value = 57777.77778/(1+0.073)^5
=$40622.08629
So present value of Perpetuity is $ 40,622.09
Please thumbs up.
Add Answer to:
A perpetuity is received via annual payments. The first payment,
which will occur in 6 years,...
A perpetuity-due with varying annual payments is available. During the first five years the payment is...
A perpetuity-due with varying annual payments is available. During the first five years the payment is constant and equal to 40. Beginning in year 6, the payments start to increase. For year 6 and all future years the payment in that year is k% larger than the payment in the year immediately preceding that year. (k <6). At an annual effective interest rate of 6.7%, the perpetuity has a present value of 751.50. Calculate k.
QUESTION 6 John receives a perpetuity making payments using the following scheme: The first payment will...
QUESTION 6 John receives a perpetuity making payments using the following scheme: The first payment will be for 2 at the end of the 5" year The remaining payments will occur every three years, following the first payment Each subsequent payment will be X% larger than the previous payment The present value of this perpetuity at an annual effective interest rate of 10% is equal to 25. Calculate X. Give your answer rounded to two decimal places.
A perpetuity has annual payments. The first payment is for $330 and then payments increase by...
A perpetuity has annual payments. The first payment is for $330 and then payments increase by $10 each year until they become level at $600. Find the value of this perpetuity at the time of the first payment using an annual effective interest of 4%. (Round your answer to the nearest cent.)
an increasing perpetuity immediate makes annual payments. the first payment is 100 and each subsequent payment...
an increasing perpetuity immediate makes annual payments. the first payment is 100 and each subsequent payment is larger than the preceding payment by an amount X. based on an annual effective interest rate of 10%, the present value of the perpetuity at time 0 is one half of its present value at time 20. what is rhe value of x?
A perpetuity due makes annual payments which begin at $100 for the first year, then increase at 6% per year through the...
A perpetuity due makes annual payments which begin at $100 for the first year, then increase at 6% per year through the 10th year, and then remain level thereafter. Calculate the present value of this perpetuity, if the annual effective rate of interest is equal to 8%.
Dake is receiving a perpetuity due with annual payments. The payments are $1,000 at the beginning...
Dake is receiving a perpetuity due with annual payments. The payments are $1,000 at the beginning of each year except the payment at the beginning of every fifth year is $6,000. In other words, the first four payments at $1,000 with the fifth payment being $6,000. This is followed by four more payments of $1,000 and then a fifth payment of $6,000. This pattern continues forever. Using an annual effective interest rate of 8%. Calculate the present value of this...
Course: Theory of Interest FM) A perpetuity is purchased for $7,000. It's first annual payment of...
Course: Theory of Interest FM) A perpetuity is purchased for $7,000. It's first annual payment of $200 will occur five years from now. Each subsequent payment is increased by an amount C from the previous payment (the payments as 200, 200 + C, 200 + 2C, ...). If the effective annual interest rate is 4% find the value of C. Answer: $4.3615664730
A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a...
A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $ 1,000. Each year after that, you will receive a payment on the anniversary of the last payment that is nbsp 7 % larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 15 % per year. a. What is today's value of the bequest? (Round to the nearest cent.) b....
Calculate X . You are buying a perpetuity with annual payments as follows Payment of X...
Calculate X .
You are buying a perpetuity with annual payments as follows Payment of X at the end of the first year and every three years thereafter. Payment of X+1 at the end of the second year and every three years thereafter. Payment of X+2 at the end of the third year and every three years thereafter The interest rate is 5% convertible semi-annually. If the present value is 40, Calculate
Calculate X You are buying a perpetuity with annual payments as follows Payment of X at...
Calculate X
You are buying a perpetuity with annual payments as follows Payment of X at the end of the first year and every three years thereafter. Payment of X+1 at the end of the second year and every three years thereafter. Payment of X+2 at the end of the third year and every three years thereafter The interest rate is 5% convertible semi-annually. If the present value is 40, Calculate
A perpetuity-due with varying annual payments is available. During the first five years the payment is constant and equal to 40. Beginning in year 6, the payments start to increase. For year 6 and all future years the payment in that year is k% larger than the payment in the year immediately preceding that year. (k <6). At an annual effective interest rate of 6.7%, the perpetuity has a present value of 751.50. Calculate k.
QUESTION 6 John receives a perpetuity making payments using the following scheme: The first payment will be for 2 at the end of the 5" year The remaining payments will occur every three years, following the first payment Each subsequent payment will be X% larger than the previous payment The present value of this perpetuity at an annual effective interest rate of 10% is equal to 25. Calculate X. Give your answer rounded to two decimal places.
Calculate X .
You are buying a perpetuity with annual payments as follows Payment of X at the end of the first year and every three years thereafter. Payment of X+1 at the end of the second year and every three years thereafter. Payment of X+2 at the end of the third year and every three years thereafter The interest rate is 5% convertible semi-annually. If the present value is 40, Calculate
Calculate X
You are buying a perpetuity with annual payments as follows Payment of X at the end of the first year and every three years thereafter. Payment of X+1 at the end of the second year and every three years thereafter. Payment of X+2 at the end of the third year and every three years thereafter The interest rate is 5% convertible semi-annually. If the present value is 40, Calculate
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