please show step by step. answer has to be 2.43. no excel function either James bought a four-year annuity with level payments of $200 at an annual yield rate of 6%. Calculate this annuity's Macaulay duration. a. 1.77 b. 2.29 d. 3.75 e. 4.02 2.43

please show step by step. answer has to be 2.43. no excel function either James bought a four-year annuity with level payments of $200 at an annual yield rate of 6%. Calculate this annuity's Macaulay duration. a. 1.77 b. 2.29 d. 3.75 e. 4.02 2.43

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8EB: You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how...

See similar textbooks

Related questions

Q: fill the missing words: a. For ( ) options, when the spot price is ( ) than(or equal to)the…

A: Options are versatile financial products. These contracts involve buyers and sellers, who pay a…

Q: Andy wants to buy a car that costs $22,750. The dealership will finance the car for 5 years, at…

A: A loan is an agreement where an amount is forwarded in exchange for a periodic payment which would…

Q: Given the following three mutually exclusive alternatives, Alternative A •.. B C Initial Cost $50…

A: Let initial cost = C Annual benefits = A n = 5 years i = 10%

Q: Assume you buy a March 1625 point FBM-KLCI call option for $25 and hold until expired. Draw an…

A: In the given case, Call option is purchased at a premium of $25 Long call is exercised only if Stock…

Q: 1. Diego deposited Php 1,000,000 on a bank that earns 20 % compounded annually. Five years later, he…

A: Future value of the amount deposit today can be found using the formula : Future value = Present…

Q: The amount by which the balance sheet does not balance at first is called ______ Total Liability…

A: The balance sheet can be defined as one of the financial statements of the business organization…

Q: When the economy is weak, money is spent freely on needs and wants. True False

A: An economy is a large set of interrelated production, consumption, and exchange activities that help…

Q: the Financial Manager of C&C Corporation and are evaluating to launch a new product that requires an…

A: Net present value is the difference between the present value of cash flow and initial investment of…

Q: A company has taken a steadily amortized loan of 3 250 000 € The loan term is 8 years with quarterly…

A: Interest on loan: It is the expense of borrowing money. It starts to accumulate, or include when…

Q: Pfizer Manufacturing just issued a bond with a $1,000 face value and a coupon rat of 8%. If the bond…

A: Face value = $1000 Coupon rate = 8% Annual coupon amount (C) = 1000*0.08 = $80 Years to maturity (n)…

Q: If the annual interest rate printed on the face of a bond is 10 percent, the face value of the bond…

A: Here, Annual Interest rate = 10% Face value of the bond =$1,000 Present value of the bond = $1,250…

Q: On the first day of the year, a man deposits $4,000 in a bank at 8% per year, compounded annually.…

A: Deposit at the begining of the year is $4,000 Interest rate is 8% per year Withdrawal at the end of…

Q: er share on June 15 to all holders on record as of May 31st. The firm's stock price closed today at…

A: Dividend: It represents a portion of profits or earnings of the company that is paid to the…

Q: A corporation uses the indirect method of preparing the statement of cash flows. A fixed asset has…

A: Solution:- Cash flow statement is that part of financial statements that represents the total net…

Q: After he retires, Dewey would like to be able to withdraw $1,250 every week for a total of 30 after…

A: Here, Annuity value (d) = $1,250 Interest rate (r) = 0.05 Number of years (N) = 30 years No. of…

Q: On October 1, 2010, EEE Inc. issued, at 101 plus accrued interest, 800 of its 10 percent, P1,000…

A: In the given case - P1000 Bonds are dated 1st July-2010. The bonds are issued on 1st October-2010…

Q: 21. You purchased a property for $4,000,000 using 50% LTV. If net cash flow is $200,000, what is the…

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: 19. You borrow $1,500,000 to purchase a small apartment building. The lender charges you a 2%…

A: Present value of annuity Annuity is a series of equal payment at equal interval. With annuity (PMT),…

Q: An engineer planning for retirement is considering purchasing a bond that has a face value of…

A: A bond is a debt instrument used to raise capital. It can be traded on the secondary market.

Q: Using the formula for YTM (yield to maturity) in the lecture, what is the rate of return for a bond…

A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to…

Q: 1. You are considering the purchase of an apartment building with the following information:…

A: It is given that: Purchase price - $12,500,000 Year 1 NOI - $1,000,000 Growth – 4% Holding period –…

Q: 1. For each of the following Treasury Bills, calculate the discount basis yield and the investment…

A: To Find: Discount yield Investment Yield

Q: If you consider 6.25% as a nominal interest rate, find the corresponding effective rate per quarter…

A: Nominal Interest Rate is 6.25%

Q: If you are to choose between viability and profitability, which one would you choose? Why?

A: A company's viability indicates that it is (or has the potential to be) profitable. A profitable…

Q: Modified True or False T means Correct and F means Wrong Scenario: CHUGS are considering two equally…

A: Periodic Payment $ 5,000.00 Time Period 10 Years

Q: VIP Ltd. predicts that its next two annual dividends will decline by 5% each year, after which…

A: Given: Declined growth rate = 5% constant growth rate = 1% Last dividend = $10 Required return = 6%

Q: 6. A company is considering two proposals. The company must implement one of them to resolve an…

A: Solution:- We know, Internal Rate of Return (IRR) is the rate of return the project (or proposal) is…

Q: Use the information below provided by Angel Baby Angel Company: Sales 8,250,000.00 Operating…

A: EVA is the economic value added which is calculated using the following formula.

Q: Expected Return on the market HPR Beta Risk-free rate Stock ABC 15.68% 1.2 1% 6.68% What is the…

A: Alpha is the abnormal return which the investors get and is above the equilibrium or expected return…

Q: Which of the following will shorten the cash cycle? Select one: A. An increase in the raw materials…

A: The answer is option D. An increase in the trade payables days

Q: A. If the market price of the common stock is $40 and dividends are expected to grow at a rate of 6%…

A: Company’s cost of retained earnings financing = (D1 or dividend next year/P0)+growth rate Company’s…

Q: Currently the risk-free rate equals 5% and the expected return on the market portfolio equals 11%.…

A: Given: Risk free rate “Rf” = 5% Market return “Rm” = 11% Stock A Beta = 1.33 Stock B Beta = 0.7…

Q: Using the formula for YTM (yield to maturity) in the lecture, what is the rate of return for a bond…

A: The formula for calculating YTM = Coupon + ((Face value+price)/no. of years to maturity)/((Face…

Q: Every year, you receive your entire annual salary at the end of the year. This year, your…

A: Inflation rate With nominal rate and real rate, the inflation rate is calculated as show below.…

Q: 1.Suppose that a client borrows a loan amount of R50,000 at annual interest rate of 10% compounded…

A: Given Information Amount of loan = R50,000 Annual interest rate = 10% Interest rate is compounded…

Q: Angel wants to buy a car after six years which will cost sh.10M. How much should he save annually if…

A: The answer is option A. 5,066,000

Q: At the end of 2016, Susan had saved 65 000 € for her retirement. She plans to withdraw at the end of…

A: In order to calculate the periodic payment of an annuity, we are required to use the PMT function of…

Q: end paid dividend by average number of shares outstanding is equivalent to retained earnings. True…

A: Companies pay the dividend out of net income to the shareholders but some income is also retained…

Q: If there is a small probability of a risk occurring, a business may choose to assume the risk rather…

A: Risk management is the process through which companies detect, analyse, and address risks that may…

Q: An engineering analysis by net present worth (NPW) s to be made for the purchase of two devices A…

A: NPV is the difference between the Present Value of Cash Inflows and Initial Investment. A project…

Q: Given the historical income statement of Mega Trade Inc., how much would be added to the company's…

A: Retained earnings are the profits left after paying dividends. Hence, the amount for any year that…

Q: esterday, Tom Brady, a professional football player, announced that after his retirement he'll move…

A: Present value of annuities would give the equivalent amount today considering the interest rate and…

Q: Shania must submit paperwork to participate in her company's flexible medical benefits program. She…

A: Status quo bias can be defined as the state where an individual does not want to change anything…

Q: Discuss the payback period, NPV (net present value), and IRR (internal rate of return) methods for…

A: Capital budgeting is the process of comparing the project's return to the needed return. It aids in…

Q: Find the present worth of the following data at /%: End of year 1 2 3 4 Net Cash Flow ($) 100 150…

A: Present worth can be defined as the today's (current) value of the future cash flows being…

Q: The following financial information was provided by Anya Company: Net Income 8,255,000.00…

A: Depreciation A depreciation is a non-cash expenses for the company. The depreciation expenses is…

Q: Suppose a firm has $10 million in debt that it expects to hold in perpetuity. It the interest rate…

A: The following information has bee provided in the question: Amount of debt= $10 million Interest…

Q: The following financial information was provided by Anya Company: Net Income 8,255,000.00 NOPAT…

A: Given, Tax rate is 35% Net income 8,255,000 EBITDA is 143,000,000

Q: It is the amount of money that will receive at the bond's maturity date. coupon discount rate par…

A: A principal + interest loan divides the principal (original amount borrowed) into equal monthly…

Q: Which of the following statements is correct? O The fundamental value of the shares in a firm is…

A: Fundamental value of a firm is its intrinsic value. It is the value which is determined after…

Question

please show step by step. answer has to be
2.43. no excel function either
James bought a four-year annuity with level payments of $200 at an annual yield
rate of 6%. Calculate this annuity's Macaulay duration.
a. 1.77
b. 2.29
2.43
d. 3.75
4.02

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

VIEW

Step 2

VIEW

Step by step

Solved in 2 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?
(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 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
You put $600 in the bank for 3 years at 15%. 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 third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
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.
Give typing answer with explanation and conclusion to all parts If $387674 is used to purchase an annuity earning 5.5% compounded monthly and paying $3102 at the end of each month, what will be the term of the annuity? Include the final, smaller annuity payment in the total. (Just state total months as a number, not years and months) What is N? What is I/Y? What is C/Y? What is P/Y? What is PV? What is PMT? What is FV?
Suppose you invest in an annuity that pays 6% interest, compounded annually. You contribute $4,500 each year for 10 years, what is the value of the annuity at the end of 10 years? Enter your answer rounded to the nearest hundred dollars. Omit the dollar sign and comma ($42,570.21 should be entered as 42600.)
A certain annuity pays 80.00 at the end of every 3 months. If the present value of the annuity is 1,200.00 and the accumulated amount is 2,000.00, determine the nominal rate? please do not use excel to solve. show the formulas. hint in the book: answer is between 10% to 12%
If 5 deposits of $600 each are made into an account at the end of years 9, 10, 11, 12, and 13, what will be the balance in the account at the end of year 25, if the account offers a stated annual rate of interest r = 12 percent compounded annually? [Optional: Try using each of the four annuity formulas to solve this problem and then verify the result using repeated lump sum calculations.]
What is the present value of an annuity of $7,100 per year, with the first cash flow received three years from today and the last one received 25 years from today? Use a discount rate of 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the present value of a 3 year, $3,000 per year annuity at 3 percent? Select one: a. $8,590 b. $9,390 c. $8486 d. $9,347 e. None of the above
suppose that $2700 is set aside each year and invested in a savings account that pays 8% interest per year, componded continously, part a: determined the accumuluated savings in this account at teh end of 25 yrs. part b: in part a,suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 25. The annuity will extend from teh EOY 26 to EOY 33, what is the value of this annuity if teh interest rate and componding frquency in part a do not change