I need help with the ((((red)))) check marks 8. Present value of annuities and annuity paymentsThe present value of an annuity is the sum of the discounted value of all future cash flows.You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatestpresent value (PV)? Assume that all annuities earn the same positive interest rate.O An annuity that pays $1,000 at the end of each yearO An annuity that pays $500 at the beginning of every six monthsO An annuity that pays $500 at the end of every six monthsO An annuity that pays $1,000 at the beginning of each yearYou bought an annuity selling at $11,635.16 today that promises to make equal payments at the beginning of eachyear for the next four years (N). If the annuity's appropriate interest rate (I) remains at 5.00% during this time,O39 06.25D 3125. 0You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in four equal annual payments. The645 31.23®6399.34then the value of the annual annuity payment (PMT) isfirst payment on the lottery jackpot will be made today. In present value terms, you really won-assuming annual interest rate of 5.00%.37,713,593.3® 32,578,420.J639,599,273.43831,027,066 91

We need to calculate payment per year and present value An annuity is a periodic payment

You bought an annuity selling at $11,635.16 today that promises to make equal payments at the beginning of each year for the next four years (N). If the annuity's appropriate interest rate (I) remains at 5.00% during this time, © 39 06. 25 D 3125. 0 A45 31.33 O6399.34 then the value of the annual annuity payment (PMT) is You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in four equal annual payments. The first payment on the lottery jackpot will be made today. In present value terms, you really won -assuming annual interest rate of 5.00%.

You bought an annuity selling at $11,635.16 today that promises to make equal payments at the beginning of each year for the next four years (N). If the annuity's appropriate interest rate (I) remains at 5.00% during this time, © 39 06. 25 D 3125. 0 A45 31.33 O6399.34 then the value of the annual annuity payment (PMT) is You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in four equal annual payments. The first payment on the lottery jackpot will be made today. In present value terms, you really won -assuming annual interest rate of 5.00%.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 8MC: Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future...

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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%?
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