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- Suppose you are going to receive Rs. 63,800 per year for five years. The appropriate interest rate is 7.3 What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are an annuity due? Which has the highest present value, the ordinary annuity or annuity due? Which has the highest future value? Will this always be true? Note- Answer all the parts of the questionSuppose you are going to receive $5,000 per year for 8 years. The appropriate interest rate is 10 percent. What is the present value of the payments if they are in the form of an ordinary, a. anhuity? b. What is the present value if the payments are an annuity due?Suppose you are going to receive $13,000 per year for 7 years. The appropriate interest rate is 8 percent. a.What is the present value of the payments if they are in the form of an ordinary annuity? b.What is the present value if the payments are an annuity due? c.Suppose you plan to invest the payments for 7 years, what is the future value if the payments are an ordinary annuity? d.Suppose you plan to invest the payments for 7 years, what is the future value if the payments are an annuity due?
- Suppose you're going to receive $7800 per year for five years. the appropriate discount rate is 7.5%. A.What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? B. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are in annuity due? C. Which has the higher present value, the ordinary annuity or the annuity due? Which has a higher future value? Will this always be true?Assume that you are offered an annuity that pays $100 at the end of each year for10 years. You could earn 8% on your money in other investments with equal risk.What is the most you should pay for the annuity? If the payments began immediately,how much would the annuity be worth? ($671.01, $724.69)If a financial planner promised to pay you $100000 a year forever, what is the maximum amount of money you would pay him today if the interest rate in the market is 5%?
- Suppose you are going to receive $10,000 per year for 5 years. The appropriate interest rate is 11%. What is the present value of the payments if they are in the form of an ordinary annuity?A You are considering investing in a security that will pay you $1000 in 30 years. If the appropriate discount rate is 10%, what is the present value of this investment? Assume these investments sell for $365, in return for which you receive $1000 in 30 years, what is the rate of return investors earn on this investment if they buy it for $365? b What is the accumulated sum of each of the following streams of ordinary annuity payments? $35 per half-year for three and a half years at 14% p.a. compounded half- yearly. $25 a year for three years compounded annually at 2%. $500 a year for 10 years compounded annually at 5%Suppose someone needs dollars 8969 in his account 5 years from now and the required rate of return is 0.1 per year, compounded continuously. How much should he deposit now? Answer:
- An investor is considering an annuity that pays $40,000 per year for four years. 1. Assuming the first $40,000 is paid in a years time given a discount rate of 4% what should the investor pay for this annuity today? 2. Assuming the first $40,000 is paid out immediately what should the investor pay today? (Asssume same discount rate). 3. If the investor pays $130,000 today and assuming the first paymentarrives in a years time, what would this investment’s internal rate of return be? (Asssume same discount rate). 4. What would the investor pay today if the first payment arrived in 5years time? (Asssume same discount rate). 5. If the investor invests $40,000 per year at the end of the next 4 years what would this be worth in 4 years time? (Asssume same discount rate).What is the future value of a 7%, 5 year ordinary annuity that pays 300 each year? If this was an annuity due, what would its future value be?You borrow P dollars now. You will pay back your debt by paying an annuity of A dollars for each of n periods into the future. Suppose m < n and that you have made your first m payments of A dollars. How much do you owe after making the mth payment.