An annuity offers a payment of $5000 at the beginning of every three months for twenty years. Interest is compounded monthly at a nominal rate of 8.8%, and the first payment is deferred for 3 years. Determine the amount that you would pay for this annuity today.

An annuity offers a payment of $5000 at the beginning of every three months for twenty years. Interest is compounded monthly at a nominal rate of 8.8%, and the first payment is deferred for 3 years. Determine the amount that you would pay for this annuity today.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 22PROB

See similar textbooks

Related questions

Q: How much money did he have for retirement?

A: Future Value of Annuity: It is the future worth of the present annuity stream cash flows and is…

Q: As a mine engineer you were asked to design the mine water treatment plant system al considerations…

A: EAC equivalent annual cost is the annual cost that is equivalent to the all cost of equipment that…

Q: The globalization of markets, even for services, has increased the number of competitors and often…

A: Global market includes the domestic market as well as international markets. The globalization of…

Q: Monica bought a $2,200 4K Ultra HD TV for 20% down, with the balance to be paid with interest at 16%…

A: Loan amortization refers to a schedule which is prepared to shows the periodic loan payments, amount…

Q: (a) DEVCON Industries is considering issuing a $20,000,000 15-year bond in early 2022, with an…

A: Given: Particulars Amount Face value(FV) $1,000 Years 15 Coupon rate 4% Yield 4.50%

Q: Find the value of his account when he is 60 years old

A: Future Value of Annuity It represents the future worth of the present annuity stream of cash flows…

Q: n American manufacturing company has new equipment with a first cost of $ 25,000, an estimated…

A: The SYD method is the sum of years digit method. In this method an asset is depreciated at an…

Q: alculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round…

A: WACC is the weighted average cost of capital. It is the average cost of all sources of capital i.e.…

Q: Build a Cash Flow Diagram and determine the amount in the account immediately after ten years. Show…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Your firm is considering a project with a five-year life and an initial cost of $260,000. The…

A: NPV It is a capital budgeting tool to decide on whether the capital project should be considered or…

Q: An aunt wants to make a gift of $100,000.00 to their niece's for her college education on her 21st…

A: Solution:- When some money is invested, it earns interest. The amount invested is called present…

Q: Compute the Expected Rate of Return of a stock that is listed in the country's stock exchange and…

A: Using CAPM method calculate the expected rate of return. Expecting rate of return indicate the…

Q: Assume that 12t = 0.50% and that 11t = 0. If the one- year interest rate is 5% and the two-year…

A: Given: Two years risk premium = 0.5% One year interest rate = 5% Two year interest rate = 5.75%

Q: D3) What is the fundamental difference between a solution strategy to determine efficient…

A: A portfolio is a collection of financial investments such as stocks, bonds, commodities, cash and…

Q: You receive $100 today, $200 in one year, and $300 in two years. If you deposit these cash flows…

A: Formula FV = CF0*(1+R)3+CF1*(1+R)2+CF2*(1+R)1 Where FV - Value of account after 3 years R - Interest…

Q: eeds to raise money to build a bridge. Designing the bridge and constructing it will require a…

A: Long period of finance is that is required for more than 10 years are required and these must be…

Q: Cool Runnings Corp. plans to construct a building after 5 years. The Chief Financial Officer…

A: We need to use present value formula to calculate the amount of cash need to invested today. Present…

Q: If Phil borrows $40,000 from a loan company at an interest rate of 6.5% per year compounded weekly,…

A: Here, Loan amount = $40,000 Quarterly payment of the loan = $800 Interest rate = 6.5% compounded…

Q: Gagah Berhad's share is expected to pay a year-end dividend of RM2 per share. The dividend is…

A: Here, Next year dividend = RM 2 Growth rate = 5% Expected rate of return = 9% Market price per share…

Q: Roberts Company is considering an investment in equipment that is capable of producing more…

A: Payback period Payback period is a capital budgeting tools to decide on which capital project is…

Q: Find the finance charge on June 4 for the data given below. There is a previous balance of $230 (on…

A: Finance charge is an additional amount which is charged on borrowed amount on the basis of time and…

Q: Preferred stock valuation Jones Design wishes to estimate the value of its outstanding preferred…

A: The market value of preferred stock will be calculated by dividing the dividend amount with required…

Q: Use the present value and future value tables to answer the following questions. A. If you would…

A: Since you have posted question with multiple sub parts, we shall be solving first three sub-parts…

Q: Big Rock Brewery currently rents a bottling machine for $52,000 per year, including all maintenance…

A: Net Present Value: It is net off values of the current worth of money inflows and outflows…

Q: Nate. borrowed Php 2000.00 from Mr. Mark on June 1,1928 and Php 500.00 on June 1, 1930, agreeing…

Q: An summary of how you would allocate people and money to the WBS's operations should be provided.

A: Work breakdown structure is referred as the description of the work, which used done regarding the…

Q: Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at…

A: As per formula; Cost of common equity = D0 * (1 + g) / P0 + g Where; D0 = Current dividend i.e.…

Q: v) For projects A and B determine the Net present value (NPV) and the internal rate of return (IRR).…

A: Net present value (NPV) and internal rate of return (IRR) are investment appraisal tools to evaluate…

Q: 1. Mary made a loan of P58,000 to supply her new business. It is to be amortized by ten equal…

A: We need to use RATE function in excel to calculate interest rate. Formula is =RATE(NPER,-PMT,PV)

Q: The Black–Scholes option pricing model (OPM) was developed in 1973. The creation of the…

A: Option pricing models (OPM) are mathematical models that compute the potential value of an option…

Q: A bank loan for 25,000 pesos is discounted at 15% for 1 ¼ years. How much does the borrower receive?

A: Formula Amount received by the borrower = MV/(1+R)N Where MV - Maturity value i.e. 25000 pesos R -…

Q: what should be the cost of a 3 month put with a strike of 25.6? Please use 5 decimal places in your…

A: Put-Call Parity: It states that holding a long call and shorting a put of the same security will…

Q: Pitt Company is considering two alternative investments. The company requires a 12% return from its…

A: IRR is the measure of calculating return on the project. A project with higher IRR should be…

Q: McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $825 per set and…

A: Selling price of new line of golf club is $825 per set. Variable cost per set of new club is $385…

Q: Subject: Corporate finance You have just inherited DKK 200,000, which you are going to invest in…

A: Expected return of an individual stock The expected return of an individual stock is the weighted…

Q: Suppose that ABC Inc. has a leverage ratio (debt to asset) 0.5. It has a beta of 1.2. The risk-free…

A: The Capital Structure consists of different sources of funds which are mainly used for financing the…

Q: he college tuition is expected to increase with an average of 5% per year for the next 5 years. The…

A: We will use the concept of time value of money here. As per the concept of time value of money the…

Q: Banyan Co.’s common stock currently sells for $56.25 per share. The growth rate is a constant 6%,…

A: Cost of Equity is the rate of return that the firm has to pay to its equity investors. It is the…

Q: tently app your existing mortgage $129,350. your bank iS willing to loan up to 709 the appraised…

A: Equity in home is the value of that is available after paying of the mortgage on the loan and credit…

Q: How much money can he receive on his 18th birthday, if he decided to withdraw all the money at once?

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: a) Find the average daily balance for the billing period. b) Find the finance charge to be paid on…

A: Average daily balance refers to the amount of the daily balances in the account divided by the…

Q: Jake borrowed P750, 000 from a credit union to purchase a used car. The interest rate on the loan is…

A: Solved using Financial Calculator PV = - 750,000 I/Y = 0.25 N = 36 CPT PMT = 21,810.91

Q: Examine the halance sheet for a bank below: Assets Liabilities Reserves 600 000 Demand Deposits 5…

A: Given: Current Reserves = 600000 Current Demand Deposit = 5230000 Desired reserve ratio = 5%

Q: Una Day is planning to retire in 20 years, at which time she hopes to have accumulated enough money…

A: Retirement fund: A retirement fund is a particular fund into which people contribute money in order…

Q: 4. Two large-scale conduits are under consideration by a large municipal utility district (MUD). The…

A: The Present Value: The total value of future cash flows at the current date is known as its present…

Q: The graph below shows the rate of change of the price of a stock (in dollar share of the stock…

A: Price of stock do changes in market as period goes on due to the buying and selling in the market…

Q: Which loan should Spike take and why?

A: Simple interest method is a method of computing interest on borrowed amount where interest is…

Q: Describe the intuition behind the Gordon growth model and the CAPM. What are the theoretical and…

A: Equity valuation: All instruments and approaches used by investors to determine the real worth of a…

Q: Calculate the monthly finance charge for the credit card transaction. Assume that it takes 10 days…

A: As per previous balance method, the interest is ascertained on the outstanding balance at the end of…

Q: and plans to make a payment of $800 per quarter, how may years will it take him to pay off the loan?

A: Loan Amortization: It is the process of paying the loan value in periodic payments of regular size.…

Question

plz solve it within 30-40 mins I'll give you multiple upvote

An annuity offers a payment of $5000 at the beginning of every three months for
twenty years. Interest is compounded monthly at a nominal rate of 8.8%, and the
first payment is deferred for 3 years. Determine the amount that you would pay for
this annuity today.
O a. $ 145 573.01
O b. $ 146 563.01
O c. $ 146 939.01
O d. $ 146 585.01
O e. $ 143 982.01

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Value of an Annuity Using the appropriate tables, solve each of the following. Required: 1. Beginning December 31, 2020, 5 equal withdrawals are to be made. Determine the equal annual withdrawals if 30,000 is invested at 10% interest compounded annually on December 31, 2019. 2. Ten payments of 3,000 are due at annual intervals beginning June 30, 2020. What amount will be accepted in cancellation of this series of payments on June 30, 2019, assuming a discount rate of 14% compounded annually? 3. Ten payments of 2,000 are due at annual intervals beginning December 31, 2019. What amount will be accepted in cancellation of this series of payments on January 1, 2019, assuming a discount rate of 12% compounded annually?
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Calculating single-payment loan amount due at maturity. Stanley Price plans to borrow 8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Stanley have to pay in five years? How much will he have to pay at maturity if hes required to make annual interest payments at the end of each year?