Your financial planner offers you two different investment plans. Plan 1 is a R3958 annual perpetuity. Plan 2 is a 12 year, R8016 annual annuity. Both plans will make their first payment one year from today. At what discount rate would you be indifferent (ie same rate) between these two plans?
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Your financial planner offers you two different investment plans. Plan 1 is a R3958 annual perpetuity. Plan 2
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is a 12 year, R8016 annual
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discount rate would you be indifferent (ie same rate) between these two plans?
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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%?Which of the following statements is most correct? Group of answer choices The value of a perpetuity (say for $100 per year) will approach infinity as the interest rate used to evaluate the perpetuity approaches zero. If you are lending money, then, based on effective interest rates, you should prefer to lend at a 10 percent simple, or quoted, rate but with semiannual payments, rather than at a 10.1 percent simple rate with annual payments. However, as a borrower you should prefer the annual payment loan. The first payment under a 3-year, annual payment, amortized loan for $1,000 will include a smaller percentage (or fraction) of interest if the interest rate is 5 percent than if it is 10 percent. All of these.
- Your insurance company offered you an annuity that pays you $100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 8%. What should be the present value of this annuity? If you are given the first payment immediately starting today, what should be the worth of this annuity? Which payment mode will you accept? What will be basis of your decision under time value of money concept?Suppose you are going to receive $12,700 per year for six years. The appropriate interest rate is 7.6 percent. a-1. What is the present value of the payments if they are in the form of an ordinary annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-2.What is the present value if the payments are an annuity due? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-1. Suppose you plan to invest the payments for six years. What is the future value if the payments are an ordinary annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-2. Suppose you plan to invest the payments for six years. What is the future value if the payments are an annuity due? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Suppose you are going to receive $14,500 per year for five years. The appropriate interest rate is 8 percent. a-1. What is the present value of the payments if they are in the form of an ordinary annuity? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a-2. What is the present value of the payments if the payments are an annuity due? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-1. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? Note: Do not round intermediate..
- Suppose you're going to receive $7800 per year for five years. the appropriate discount rate is 7.5%. A.What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? B. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are in annuity due? C. Which has the higher present value, the ordinary annuity or the annuity due? Which has a higher future value? Will this always be true?You have an annuity that pays $15 per year for 61 years. What is the future value (FV) of this annuity at the end of that 61 years given that the discount rate is 10%? Must use excel or finance calculator m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FVAssume you are to receive a 20-year annuity with monthly payments of $50. The first payment will be received at the end of month 1, and the last payment will be received at the end of the last month of Year 20. You will invest each payment in an account that pays 10% compounded monthly. You will stop making payments into the account at the end of year 20. What will be the value in your account at the end of Year 30? Group of answer choices $37,968 $278,236 $2,864 $102,782
- You purchase an annuity that will pay you $100 every three months for five years. The first $100 payment will be made as soon as you purchases the investment. If your required rate of return is 9% , how much should you be willing to pay for this investment? Group of answer choices $1,596.82 $1,632.29 $1,759.34 $1,510.46You may purchase an annuity that will pay you 300000 in income per year starting one year from now and continuing for a total 22 years, or 22 payments. Assuming an annual risk-free interest rate of 4%, what is a fair price for this annuity?Which is a better way to invest $7,000 if the concern is simply the future value: a 2-year certificate of deposit paying 2.2% compunded quarterly, or a 2-year annuity that divides that $7,000 into 8 quarterly payments and pays 5.6% compunded quarterly? Round your answer to the nearest cent. A) The 2- year certificate of deposit has a future value of $7313.99 B) The 2-year annuity has a future value of $
