What is the present value of the payments

Assignment Help Financial Management
Reference no: EM13849351

Looking for the formula and breakdown for the following question? How the answer was found?

Calculating Annuities Due- Suppose you are going to receive $15,800 per year for five years. The appropriate interest rate is 7.9 percent.

(a) What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value of 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 annuity due?

(c) Which has the highest present value, the ordinary annuity or annuity due? Which has the highest future value? Will this always be true?

Reference no: EM13849351

Questions Cloud

The payments are made monthly : You take out a 4 year car loan for $18,000. The loan has a 4% annual interest rate. The payments are made monthly. What are the monthly payments?
Treasury bond-default risk premium and liquidity premium : A 5-year Treasury bond has a 4.05% yield. A 10-year Treasury bond yields 6.15%, and a 10-year corporate bond yields 9.35%. The market expects that inflation will average 2.1% over the next 10 years (IP10 = 2.1%). A 5-year corporate bond has the same ..
Real risk-free rate-what is its default risk premium : The real risk-free rate, r*, is 2.1%. Inflation is expected to average 3.2% a year for the next 4 years, after which time inflation is expected to average 4.05% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yie..
Invest today to receive : How much would you have to invest today to receive?
What is the present value of the payments : Calculating Annuities Due- Suppose you are going to receive $15,800 per year for five years. The appropriate interest rate is 7.9 percent. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present v..
Chinese corporation-pre-set price in dollars : The Chinese Yuan was reset from 8.28 Yuan? $ to 8.11 Yuan / $ in July 2005. If Cnooc (Chinese Corporation) had agreed to acquire Uncoal (US corporation) before July for a pre-set price in dollars,
What is the effective annual rate on this loan : Calculating Loan Payments- You want to buy a new sports coupe for $79,500 and the finance office at the dealership has quoted you an APR of 5.8 percent for a 60-month loan to buy the car. What will your monthly payments be? What is the effective annu..
Calculating future values : Calculating Future Values- What is the future value of $2400 in 17 years assuming an interest rate of 7.9 percent compounded semiannually?
Calculating annuity present value : Calculating Annuity Present Value- An investment offers $5,500 per year for 15 years, with the first payment occurring one year from now. If the required return is 6 percent, what is the value of the investment? What would the value be if the payment..

Reviews

Write a Review

Financial Management Questions & Answers

  Firms net capital spending-operating cash flow

Maria's Tennis Shop, Inc., had Cash Flow to Creditors of $-810,000. The firm also had Cash Flow to Shareholders of $-2,275,000. If the firm's net capital spending for 2009 was $710,000, and the firm reduced its net working capital investment by $145,..

  What is your monthly payment

You are considering purchasing a new automobile that will cost you $28,000. The dealer offers you 4.9% APR financing for 60 months (with payments made at the end of the month). Assuming you finance the entire $28,000 through the dealer, what is your ..

  Current assembly system-vibration isolation platforms

A small company that manufactures vibration isolation platforms is trying to decide whether it should upgrade the current assembly system (System D), which is rather labor-intensive, with one that is more highly automated (System C). Some components ..

  Critically evaluate the role and function of finance

Critically evaluate the role and function of finance, including the presentation and analysis of financial information, in sustaining and contributing towards the competitive advantage of organisations...

  Balanced scorecard dear sir madamkindly attached find the

dear sir madam ltbrgt ltbrgtkindly attached find the assignment that i need 100 plagiarism free please let me know

  Estimate of the portfolio expected rate of return

A portfolio consists of an index mutual fund which represents the overall market and Treasury bills. The fund has a portfolio weight of 60%. The risk-free rate is 3.2% and the market risk premium is 7.6%. What is your best estimate of the portfolio e..

  What is the intrinsic value of supers shares

Super carpeting Inc just paid a deidend (Do) of $3.12, and its dividend is expected to grow ata constant rate (g) of 6.5% per year. if the required (rs) on Super's stock is 16.25%, what is the intrinsic value of Super's shares?

  The amount available for distribution to all claimants

Duchon Industries had the following balance sheet at the time it defaulted on its interest payments and filed for liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $900 mil..

  Suppose that annual income from a rental property

Suppose that annual income from a rental property is expected to start at $1,200 per year and decrease at a uniform amount of $35 each year after the first year for the 17-year expected life of the property.

  Which security is riskier

Security A has an expected return of 7% a standard deviation of returns of 35%, a correlation coefficient with the market of -0.3, and a beta coefficient of -1.5. Security B has an expected return of 12%, a standard deviation of returns of 10%, a cor..

  What is the net present value of this investment

You are making a $63,500 investment and feel that a 10% rate of return is reasonable given the nature of the risks involved. You feel you will receive $19,500 in the first year, $24,700 in the second year and $43,200 in the third year. What is the ne..

  Describe the purpose primary financial statements

Describe the purpose of each of the five primary financial statements.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd