What is the present value of a perpetual stream of cash flows that pays $70,000 at the end of year one and then grows at a rate of 5% per year indefinitely? The rate of interest used to discount the cash flows is 11%.
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What is the present value of a perpetual stream of cash flows that pays
$70,000 at the end of year one and then grows at a rate of
5% per year indefinitely? The rate of interest used to discount the cash flows is
11%.
Question content area bottom
Part 1
The present value of the growing perpetuity is $
enter your response here
. (Round to the nearest cent.)
Step by step
Solved in 2 steps
- (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.What is the present value of a perpetual stream of cash flows that pays $ 7,500 at the end of year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 9%? What if the appropriate discount rate is 7%? Question content area bottom Part 1 a. If the appropriate discount rate is 9%, the present value of the growing perpetuity is $ enter your response here . (Round to the nearest cent.)
- What is the value now of an annuity that paysf $6,000 at the end of each of the next 92 years assuming an interest rate is 9% per year? Question content area bottom Part 1 The PV is $enter your response here. (Round to the nearest dollar.)What is the present value of $3,000 received a. 10 years from today if the interest rate is 4% per year? b. 20 years from today if the interest rate is 8% per year? Question content area bottom Part 1 a. The present value is $enter your response here. (Round to the nearest cent.) b. The present value is $enter your response here. (Round to the nearest cent.)If you deposit $2 comma 7002,700 today into an account earning an annual rate of return of 1313 percent, what will your account be worth in 4040 years (assuming no further deposits)? In 5050 years? Question content area bottom Part 1 Click on the table icon to view the FVIF table: LOADING... . In 4040 years, your account will be worth $enter your response here. (Round to the nearest cent.)
- If you invest $9,700 per period for the following number of periods, how much would you have received at the end? Use Appendix C. (Round "Factor" to 3 decimal places. Round the final answers to the nearest whole dollar.) a. 11 years at 9 percent Future value $ b. 16 years at 11 percent Future value $ c. 30 periods at 10 percent Future value $How much do you have to deposit today so that beginning 11 years from now you can withdraw $ 15,000 a year for the next 4 years (periods 11 through 14) plus an additional amount of $ 30,000 in the last year (period 14)? Assume an interest rate of 5 percent. Question content area bottom Part 1 The amount of money you have to deposit today is $ enter your response here . (Round to the nearest cent.)Suppose you are given the following cash flow stream. If the interest rate is 20 percent, what is the future value of this cash flow stream at the end of Year 3? Year CF 10 $0 1 $344 2 $314 3 $290 Enter your answer rounded off to two decimal places. Do not enter $ in the answer box.
- At a discount rate of 6.00%, find the present value of a perpetual payment of $ 1,000 per year. If the discount rate were lowered to 3.00%, half the initial rate, what would be the value of the perpetuity? Question content area bottom Part 1 a. If the discount rate were 6.00%, the present value of the perpetuity is $ enter your response here . (Round to the nearest cent.)pls answer and show cash flow diagram I will invest $500 per quarter for my retirement at 7.3% compounding quarterly for 32 years. I have achoice of making that payment of $500 at the beginning or the end of the quarter (regular annuity orannuity due). In which account will I have more money and by how much? Which account will earn themost interest and by how much? Ans: Regular Annuity‐ $249981.20, Interest = $185981.20; Annuity Due‐ $254543.36, Interest =$190543.36Suppose the interest rate is 6.9 APR with monthly compounding. What is the present value of an annuity that pays $110 every three months for five years? (Note: Be careful not to round any intermediate steps less than six decimal places.) Question content area bottom Part 1 The present value of the annuity is $ enter your response here. (Round to the nearest cent.)
