What is the present value of a perpetual stream of cash flows that pays $3,500 at the end of year one and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 15%? What if the appropriate discount rate is 13%?
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at the end of year one and the annual cash flows grow at a rate of
per year indefinitely, if the appropriate discount rate is
What if the appropriate discount rate is
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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%?(Related to Checkpoint 6.5) (Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $5,500 at the end of year one and the annual cash flows grow at a rate of 3% per year indefinitely, if the appropriate discount rate is 11%? What if the appropriate discount rate is 9%? a. If the appropriate discount rate is 11%, the present value of the growing perpetuity is $ (Round to the nearest cent.) b. If the appropriate discount rate is 9%, the present value of the growing perpetuity is $ (Round to the nearest cent.) Next abc IMG P Type here to search F6 F7 F5 Esc F3 F4 F1 F2 %23 124 % 2 3 W R Tab F G S CapsLkWhat is the present value of a perpetuity stream of cash flows that pays P1,000 at the end of year one, and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 8%?
- What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of year one and then grows at a rate of 6% per year indefinitely? The rate of interest used to discount the cash flows is 10%. The present value of the growing perpetuity is $enter your response here. (Round to the nearest cent.)The 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 greatest present value (PV)? Assume that all annuities earn the same positive interest rate. An annuity that pays $500 at the end of every six months An annuity that pays $1,000 at the end of each year An annuity that pays $1,000 at the beginning of each year*** This is the correct option**** An annuity that pays $500 at the beginning of every six months A. An ordinary annuity selling at $2,514.15 today promises to make equal payments at the end of each year for the next eight years (N). If the annuity’s appropriate interest rate (I) remains at 8.00% during this time, the annual annuity payment (PMT) will be . B. You just won the lottery. Congratulations! The jackpot is $10,000,000, paid in eight equal annual payments. The…If the present value of an annuity is 38888 dollars, r=3.4% and t=19 years. Assuming annual payments, what will be the cash flow (C)? Answer:
- The 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 greatest present value (PV)? Assume that all annuities earn the same positive interest rate. O An annuity that pays $500 at the beginning of every six months O An annuity that pays $500 at the end of every six months O An annuity that pays $1,000 at the beginning of each year O An annuity that pays $1,000 at the end of each year An ordinary annuity selling at $4,947.11 today promises to make equal payments at the end of each year for the next eight years (N). If the annuity's appropriate interest rate (1) remains at 6.50% during this time, the annual annuity payment (PMT) will be You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in eight equal annual payı The first payment on the lottery jackpot will be made today. In present value terms, you really won -assuming…What is the present value of the following cash-flow stream if the interest rate is 12%? You receive 100 at the end of first year, 800 at the end of second year, and 460 at the end of third year. (12% is annual interest rate and given annual compounding) (Please round your answer to the nearest whole number)The 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 greatest present value (PV)? Assume that all annuities earn the same positive interest rate. O An annuity that pays $500 at the end of every six months An annuity that pays $500 at the beginning of every six months An annuity that pays $1,000 at the end of each year. An annuity that pays $1,000 at the beginning of each year An ordinary annuity selling at $14,130.15 today promises to make equal payments at the end of each year for the next twelve years (N). If the annuity's appropriate interest rate (I) remains at 8.00% during this time, the annual annuity payment (PMT) will be You just won the lottery. Congratulations! The jackpot is $85,000,000, paid in twelve equal annual payments. The first payment on the lottery jackpot will be made today. In present value terms, you really won…
- What is the present value of a perpetual stream of cash flows that pays $ 7,500 at the end of year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 9%? What if the appropriate discount rate is 7%? Question content area bottom Part 1 a. If the appropriate discount rate is 9%, the present value of the growing perpetuity is $ enter your response here . (Round to the nearest cent.)A perpetuity will make its first payment in 20 years. The first payment will be $5,000, and future payments will increase at a 10 percent annual rate. What is the present value of this investment, assuming a 10% discount rate? Place Answer in Blank Above. What is the difference between a perpetuity and a growing perpetuity? What are real-world examples of each?Calculate the present value at t=0 (now) of the following cash flows: D. $100 every 3 years forever, with the first payment at t=3 (t counts years), where the effective annual rate is .05 (i.e. 5%) E. $1000 every 3 years forever, with the first payment at t = 3 (t counts years), where the effective annual rate is .05 (i.e., 5%). F. $1000 every 3 years forever, with the first payment at t = 3 (t counts years), where the effective annual rate is .10 (i.e., 10%).
