Given an annual rate of payment of f (t) 50e0.08t at time t for 7 years and a constant force of interest 8 = 6%, Find the PV of this continuously varying payments annuity. Possible Answers A 374 B 376 C 378 D 381 E 383 =

Given an annual rate of payment of f (t) 50e0.08t at time t for 7 years and a constant force of interest 8 = 6%, Find the PV of this continuously varying payments annuity. Possible Answers A 374 B 376 C 378 D 381 E 383 =

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

See similar textbooks

Related questions

Q: The following information is to be used in the following two questions: Using the expectations…

A: Expectation theory states that the future short term rates will be equal to the current long term…

Q: You bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for…

A: A bond is where the borrower promises to pay the interest and the principal on maturity to the…

Q: Which of the following statements is correct about corporate bond/ A.The corporate bond with AAA…

A: Default risk means risk that issuer of the bond may fail to pay coupon or face value at the…

Q: nt, what is the current share price?

A: Information Provided: Year 1 Dividend = $5.40 Year 2 Dividend = $16.40 Year 3 Dividend = $21.40…

Q: For the appraised Valve and Appraised Nice 356,700 Second Mortgage Application Calculate the and…

A: Here, Appraised value = $356,700 Lender's percentage = 75% Balance of first mortgage = $194,500 To…

Q: A person has two investment alternatives, both of which are $15,000. first offers a payment of…

A: IRR In discounted cash flow analysis, the ratio that brings the NPV to zero is called the IRR. IRR…

Q: Stephanie Carter has been gifted a sum of $50,000 by her grandparents on completing her graduation…

A: Given: Particulars Pan Elixir Rebound Cheers Think local Last year dividend $2.50 $0.50 $1.00…

Q: Regarding question 4. can you calculate the Bond value for pleasant Innovation? the question never…

A: Pleasant Innovation: Data given: Face Value=$100 Issue Price=$100*98% = $98 Coupon rate=3% (paid…

Q: A portfolio has 164 shares of Stock A that sell for $70.81 per share and 395 shares of Stock B that…

A: Weight of stock in portfolio can be calculated by dividing the value of individual stock by total…

Q: Let's say a bank offers the following exchange rates between US Dollar ($), Euro (€), British Pound…

A: concept. triangular arbitrage triangular arbitrage involves use of three currencies to make profit…

Q: Stephanie Carter has been gifted a sum of $50,000 by her grandparents on completing her graduation…

A: Here, Gifted sum = $50,000 Tax rate = 25% To Find: Expected intrinsic price of each stock in year…

Q: Locent technology maintains In grass Margain of 40% April the Company had A 231, 180 B 300, 960. ẹ…

A: Solution:- Gross profit means the amount of profit earned after deducting manufacturing expenses…

Q: Barton Industries expects next year's annual dividend, D1, to be $1.70 and it expects dividends to…

A: When a company comes up with a new issue, it may have to incur legal, advisory, underwriting fees…

Q: Bank K is about to sign a loan agreement with a mining company.The current LIBOR rate is 8%.The risk…

A: As per the given information: LIBOR rate - 8% Risk premium - 3% Origination fee - 0.1875%…

Q: Brown Mines needs $1.2 billion of new equity.Market price is $25.Brown Mines decides to raise…

A: Value of right is calculated when right shares are issued by the company to the existing…

Q: How much more is a perpetuity of $1,000 worth than an annuity of the same amount for 25 years?…

A: A perpetuity is a type of annuity. It is that annuity that goes on forever.

Q: Compute the (a) net present value, (b) internal rate of return (IRR), (c) modified internal rate…

A: Year Project AB Project LM Project UV 0 $-90,000.00 $ -1,00,000.00 $ -96,500.00 1 $…

Q: A company just paid a dividend of $4.15 per share. The company is expected to increase its dividend…

A: Dividend model have been used to calculate the price of stock based on the two stage growth model…

Q: (Calculating free cash flows) At present, Solartech Skateboards is considering expanding its product…

A: Initial expenditure $ 11,00,000.00 Net working capital requirement $ 40,000.00 Selling…

Q: Patty purchases a $190,000 house. She pays $50,000 down and takes out a 15-year mortgage with…

A: Mortgages A mortgage is a legal agreement between a lender and a borrower in which the borrower…

Q: Chuck Wells is planning to buy a Winnebago motor home. The listed price is $155,000. Chuck can get a…

A: Given: Cost of the motor home = $155,000 15% of it is paid as down payment. Interest rate = 7.35%…

Q: An over-the-road tractor is purchased for $102,195 and placed in service in July 2017. The owner…

A: Depreciation refers to the reduction in the cost of an asset over its lifetime. It provides the…

Q: Westco Company issued 11-year bonds a year ago at a coupon rate of 8.9 percent. The bonds make…

A: Given, The par value is $1000 Coupon rate is 8.9% Yield to maturity is 7.2%

Q: A stock that currently sells for $150 has a required return of 11.45% and dividend yield of 3%. What…

A: Select financials about a stock are available. We have to find the expected dividend from the stock.

Q: Juanita Finn deposits $12,000 into Valley Bank that pays interest of 8%, compounded quarterly. At…

A: Compound Interest Interest added on the interest already received is known as compound interest. For…

Q: e will require a return of at least 9% on her stock investments and 4% on bond investments.…

A: The dividend growth model can be applied to calculate the price of stock based on constant growth of…

Q: Consider a synthetic forward option, with the strike price, K = $19, while the initial stock price =…

A: The synthetic forward contract is used to create an artificial forward position by buying/selling a…

Q: Suppose that at the end of 2021 the one-year interest rate was 9.75% and the two-year interest rate…

A: Based on the interest rates given, we have to interpret the yield curve and calculate the expected…

Q: A stock has a beta of 1.08, the expected return on the market is 0.09, and the risk-free rate is…

A: Here, Beta = 1.08 Expected return on the market = 0.09 Risk-free rate = 0.06 To Find: Expected…

Q: Determine the Ending Inventory and Gross Profit using FIFO and LIFO for the quarter ending 3/31/XX…

A: FIFO means first-in, first-out i.e. oldest inventory will be sold out on a priority basis and…

Q: hy did you use the dividend yield to calculate the Stock price in 5yrs? why not use the current…

A: The price of stock can be found as the present value of dividends and the future growth of dividends…

Q: roperty and was purchased for $118,551. Click the icon to view a table of MACRS rates.

A: MACRS is modified accelerate depreciation in which there is more depreciation in the initial years…

Q: nominal payment each year, forever. It is also a good approximation for the present discounted value…

A: Present value of the future cash flow of the bonds depends on the period of cash flow and discount…

Q: Will Stephanie have enough funds for her investment in stocks and bonds, when needed? What will be…

A: Given: Particulars Pan Elixir Rebound Cheers Think local Last year dividend $2.50 $0.50 $1.00…

Q: An investor wants to know the YTM on an 8-year, 7% bond selling for 88.95% of its par value before…

A: Lets assume face value of the bond = 1,000 Annual coupon amount = 70 (i.e. $1,000 * 7%) Maturity…

Q: To help out with her retirement savings, Linda invests in an ordinary annuity that earns 6.6%…

A: An annuity is a contract in which a series of payments are exchanged for a lump sum payment.…

Q: EE eBook Stock R has a beta of 2.5, Stock S has a beta of 0.75, the required return on an average…

A: The stock that has a higher beta is considered riskier because a little change in the overall market…

Q: A stock's returns have the following distribution: Sharpe ratio: % Demand for the Company's Products…

A: Demand for the Company's Products Probability of this Demand Occurring (P) Rate of Return if this…

Q: How much interest is earned in just the 48th year on a $ 50 dollar deposit that earns 5% interest…

A: Information Provided: Initial deposit = $50 Interest rate = 5% compounded annually Period = 48…

Q: Which of the following is an example of a way in which companies can create value by exploiting real…

A: Company has to take decisions while doing business but decisions must be based on logical and…

Q: Proven Specialist will spend $850,000 on a piece of equipment that will manufacture fine wire for…

A: Net Investment Net Investment The net investment shows the amount of money that the company utilizes…

Q: Based on the next table, calculate the GBP/CHF quote. EUR/USD 1.15697 USD/JPY 105.230 GBP/USD…

A: Information Provided: EUR/USD = 1.15697 USD/JPY = 105.230 GBP/USD = 1.31946 USD/CHF = 0.95564…

Q: Given the following historical returns, calculate the average return and the standard deviation:

A: Information Provided: Year 1 Return = 14% Year 2 Return = 10% Year 3 Return = 15% Year 4 Return =…

Q: 12. Calculating EAR Find the EAR in each of the following cases. Stated Rate (APR) Number of Times…

A: Effective Annual Rate The rate of return on an investment made or the interest rate on a loan is…

Q: Larry wants to start an IRA that will have $620,000 in it when he retires in 26 years. How much…

A: Annuity refers to a series of regular payments being made for a defined period. If the payments are…

Q: You bout a 5 year bond for a nominal yield of 5% compounded seniannually.The face value of the bond…

A: Face Value of Bond is $10,000 Time PEriod is 5 years Nominal yield of 5% Compounded semi-annually…

Q: Using the accompanying Retirement Calculator spreadsheet model, Claire wants to use Scenario Manager…

A: In this case, we have to find the FV of a growing annuity over different scenarios. Since we have to…

Q: Date DJIA S&P 500 January 6 11,998 1,278 January 13 12,022 1,289…

A: Date DJIA S&P 500 Jan-06 11,998.00 1,278.00 Jan-13 12,022.00…

Q: Company X is rated A and has 3 bonds issued 2 years ago. All the bonds were issued at par. Bond A is…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: Given the above information, calculate the cumulative abnormal return (CAR) for these stocks as a…

A: Abnormal Returns: Abnormal returns represent the difference between the security's actual return…

Question

100%

Given an annual rate of payment of f (t) = 50e0.08t at time t for 7 years
and a constant force of interest 8 = 6%, Find the PV of this continuously
varying payments annuity.
Possible Answers
A
B
C
374
E
376
378
D 381
383

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 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

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
(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%?
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?
Complete the table below by computing for the unknown component of a general annuity. PMT r t Payment interval Compounding period FV PV 1.P900 6% 6.25 yrs. Monthly quarterly ? 2.P1800 11% 8 yrs. Quarterly monthly ? 3.P500 5% 8 yrs. Monthly annually ?
Find the quarterly payment if the PV of an Annuity is $6250 the Future Value is $9070 after 8 years and the quarterly interest rate is 1.25%.
What is the future value of an annuity due of $800 paid semi-annually for the next 7 years, with a yield of 5% p.a. compounded semi-annually? Select one: a. $13,215.16 b. $6,923.22 c. $11,200.00 d. $13,545.54
Find the value of the ordinary annuity at the end of the indicated time period. The payment R, frequency of deposits m (which is the same as frequency compounding) annual interest rate r, and time t amount $800 monthly interest rate 5.5%6years what is the future value of the given annu
Suppose the interest rate is 9% APR with monthly compounding. Then the present value of an annuity that pays $256 every quarter for the next seven years is closest to: a. $5514 b. $5212 c. $5276 d. $5264
Suppose a $100 monthly payment, at a .5% nominal rate per month, for 36 months. Find the present value of this annuity, assuming there is continuous compounding. $34,863.66 $38,863.66 $32,863.66 $32,663.66
Solve by using formulas. (Round your answer to the nearest cent.) Ordinary Annuity AnnuityPayment PaymentFrequency TimePeriod (years) NominalRate (%) InterestCompounded Future Valueof the Annuity (in $) $4,000 every 6 months 9 9.0 semiannually $
calculate the present value (in $) of the ordinary annuity. (Round your answer to the nearest cent.) AnnuityPayment PaymentFrequency TimePeriod (years) NominalRate (%) InterestCompounded Present Valueof the Annuity $3,000 every year 20 5 annually $
Suppose an annuity at 5% compounded semi-annually will pay $5000 at the end of each 6-month period for 7 years with the first payment deferred for 13 years.(a) What is the number of payment periods and the number of deferral periods?(b) What is the interest rate per period?(c) Find the present value of this annuity.