Use the formula for the present value of an ordinary annuity or the amortization formula to solve the following problem. PV = $10,000; i = 0.02; PMT = $350; n = ? n= (Round up to the nearest integer.)
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- (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%?Use the formula for the present value of an ordinary annuity or the amortization formula to solve the following problem. PV=$12,00; PMT=$400; n=55; =i?The present value of a perpetuity is equal to the payment on the annuity, PMT, divided bythe interest rate, I : PV = PMT/I. What is the future value of a perpetuity of PMT dollars peryear? (Hint: The answer is infinity, but explain why.)
- se the formula for the present value of an ordinary annuity or the amortization formula to solve the following problem. PV=$9,000; PMT=$600; n=20; i=? i=? (Type an integer or decimal rounded to three decimal places as needed.)Use a calculator to evaluate the present value of an annuity formula for the values of the variables m, r, and t (respectively). Assume n = 12. (Round your answer to the nearest cent.) $1,050; 6%; 7 yrWe can now use the following formula to find the present value of the account where the annuity payments are $400 each month. present value = table factor ✕ annuity payment The table factor was determined to be 21.67568. Before using the above formula, we must add 1 to the table factor since this is an annuity due. Thus, the table factor to use in the formula is 21.67568 + 1 = . Substitute the values into the formula, rounding the result to the nearest cent. present value = table factor ✕ annuity payment = ✕ 400 = $ Therefore, to receive annuity payments of $400 at the beginning of each month for 2 years, the amount that should be deposited now into an account earning 6% interest compounded monthly, to the nearest cent, is $ .
- Use a calculator to evaluate the present value of an annuity formula P = m 1 − 1 + r n −nt r n for the values of the variables m, r, and t (respectively). Assume n = 12. (Round your answer to the nearest cent.) $50; 7%; 5 yr $What's the future value of a 3%, 5-year ordinary annuity that pays $300 each year? If this was an annuity due, what would its future value be? Do not round • intermediate calculations. Round your answers to the nearest cent.The parameters of this question are on the sheet below. We have determine that the best option using the equivalent annuity method is the Large. Because we fouand that: The Annual Worth of small = $19,112.45 The Annual Worth of Medium = $26,667.4 The Annual Worth of Large = $27,413 Now, Assume that the planning period is 5 years, what assumptions should be made for the Small and Medium models to ensure that their equivalent annuities calculated before remain true!! In other words, calculate the recovery values of the Small model and medium model to year 5. Since the useful life of the Grand model is already 5 years, you do not have to perform any further calculations for this model. Support your response with calculations that are done in your discussion paper.
- What is the future value of a 12%, 5-year ordinary annuity that pays $600 each year? Do not round intermediate calculations. Round your answer to the nearest cent. $ If this were an annuity due, what would its future value be? Do not round intermediate calculations. Round your answer to the nearest cent. $You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT? a. The present value of ORD exceeds the present value of DUE, and the future value of ORD also exceeds the future value of DUE. b. The present value of ORD must exceed the present value of DUE, but the future value of ORD may be less than the future value of DUE. c. The present value of DUE exceeds the present value of ORD, and the future value of DUE also exceeds the future value of ORD. d. The present value of DUE exceeds the present value of ORD, while the future value of DUE is less than the future value of ORD. e. If the going rate of interest decreases from 10% to 0%, the difference between the present value of ORD and the present value of DUE would remain constant.Consider a stream of cash flows, where you receive $2,000.00 per year for 20 yearsEXCEPT year 12 during which you receive only $1,000.00. If the current market rate ofinterest is 7.200% (compounded annually), then what is the present value of this stream ofuneven cash flows? Hint: there are several ways to solve this problem but see if you cansolve it using a single annuity formula.