(Present value of a growing perpetuity) As a result of winning the Gates Energy Innovation Award, you are awarded a growing perpetuity. The first payment will occur in a year and will be for $30,000. You will continue receiving monetary awards annually with each award increasing by 7 percent over the previous award, and these monetary awards will continue forever. If the appropriate interest rate is 12 percent, what is the present value of this award? The present value of the award is $ nearest cent.) (Round to the

(Present value of a growing perpetuity) As a result of winning the Gates Energy Innovation Award, you are awarded a growing perpetuity. The first payment will occur in a year and will be for $30,000. You will continue receiving monetary awards annually with each award increasing by 7 percent over the previous award, and these monetary awards will continue forever. If the appropriate interest rate is 12 percent, what is the present value of this award? The present value of the award is $ nearest cent.) (Round to the

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Jami Minard wants to receive an annuity of $5,000 at the beginning of each year for the next 10 years. How much (in $) should be deposited now at 7% compounded annually to accomplish this goal? (Round your answer to the nearest cent.)
You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement. The annual interest rate is 8 percent. Required: How much would you need to have saved in your retirement fund to achieve this goal? a) Assume that the perpetuity payments start on the day of your retirement. b) Assume that the perpetuity payments start one year from the date of your retirement.
Find the future value of the following annuity due. Then determine how much of this value is from contributions and how much is from interest $300 deposited at the beginning of each quarter for 13 years at 8.96% compounded quarterly The account will have a total of Safter 13 years. (Round to the nearest cent as needed.) How much of this is from contributions? $ (Round to the nearest cent as needed.) How much of this is from interest? $ (Round to the nearest cent as needed)
Computing the Future Value of an Annuity Stone will deposit $8,250 at the beginning of each year for 10 years in a fund that earns 5%, compounded annually. What is the total amount of the fund at the end of 10 years? Round your answer to the nearest whole number. Do not use a negative sign with your answer. $ Answer
you want to establish an annuity that will pay $7,500 for the next twenty years (end year) your financial institution will establish such an annuity if you deposit $104,000 today. what is the implied rate that the institution is paying on this annuity?
You intend to make the annual maximum contribution of $6,000 to your Roth IRA (individual retirement account) at the end of each year for the next 30 years. If you can earn 10 percent on your contributions, how much will you have at the end of the thirtieth year? Include the follwing variables to help you solve the problem: m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV
Find the future value of an annuity of $1200 paid at the end of each year for 10 years, if interest is earned at a rate of 4%, compounded annually. (Round your answer to the nearest cent.) $____________________________
Find the future value of each annuity due. Then determine how much of this value is from contributions and how much is from interest. Payments of $1000 made at the beginning of each semiannual period for 7 years at 8.49 % compounded semiannually The future value of the annuity due is $. (Do not round until the final answer. Then round to the nearest cent as needed.) The amount from contributions is $ The amount from interest is $ (Do not round until the final answer. Then round to the nearest cent as needed.)
A friend who owns a perpetuity that promises to pay $1,000 at the end of each year, forever, comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,001. At an interest rate of 10%, should you pay the $1,000 today to receive payment numbers 26 and onwards? What does this suggest to you about the value of perpetual payments?
Determine the annual payment required to fund a future annual annuity of $12,000 per year. You will fund this future liability over the next five years, with the first payment to occur one year from today. The future $12,000 liability will last for four years, with the first payment to occur seven years from today. If you can earn 8 percent on this account, how much will you have to deposit each year over the next five years to fund the future liability?
A perpetuity will pay $1,000 per year, starting five years after the perpetuity is purchased. What is the future value (FV) of this perpetuity, given that the interest rate is 3%?
Your uncle is trying to figure out how much he has to have set aside today to pay for his son's undergraduate education. The first payment is due tomorrow. Tuition is $15,000 per year for the next four years, with payment due always at the beginning of each academic year. a, what's the EAIR if a 6% rate compounded semi-annually? % (2 decimals) b, what's the present value of annuity excluding the first payment?$ (2 decimals) c, how much should your uncle have set aside today in order to pay for four years of tuition assuming he can invest his money at a 6% rate compounded semi-annually?$

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