q5. An investment product will provide a cash flow of $613 at the end of each year for the following 18 years. At a discount rate of 8percent, what does this investment worth to you today? Answer: $ q6. If you purchase an investment at $51,401 today, in return, youwill receive a(n) 12 percent, 20 - year annuity. What will the annual cash flow be? Answer: $ q7. Your bank account offers an annualinterest rate of 1.0% that compounds monthly. What is the effective annual rate (EAR) for your account

Q7) Effective Annual Rate = (1+APR/No. of periods)^No. of periods-1Effective Annual Rate =…

Answered: q5. An investment product will provide…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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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
How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%
If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
A new investment opportunity for you is an annuity that pays $650 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? Select the correct answer. a. $1,903.81 b. $1,885.91 c. $1,850.11 d. $1,832.21 e. $1,868.01
If you put up $29,000 today in exchange for a 7.25 percent, 13-year annuity, what will the annual cash flow be? Multiple Choice $3,719.74 $3,323.85 $3,519.21 $2,230.77 $6,414.51
a. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $250,000 for 20 years? Assume that the annuity will earn 12 percent per year. b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year. c. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.5 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of five years. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
● An investment will provide you with $100 at the end of each year for the next 10 years. What is the present value of that annuity if the discount rate is 8% annually? • What is the present value of the above if the payments are received at the beginning of each year? • If you deposit those payments into an account earning 8%, what will the future value be in 10 years? • What will the future value be if you open the account with $1,000 today, and then make the $100 deposits at the end of each year?
You are offered an annuity that will pay $11,000 per year for 24 years (the first payment will occur one year from today). If you feel that the appropriate discount rate is 12%, what is the annuity worth to you today? $914,490.09 $1.299,707.65 $95,902.77 $1,455,672.57 $85.627.47 You are told that if you invest $10,900 per year for 12 years (all payments made at the end of each year) you will have accumulated $670,000 at the end of the period. What annual rate of return is the investment offering? 29.99% 23.63% 20.63% 26.99% 33.44%
A new investment opportunity for you is an annuity that pays $560 at the beginning of each year for 3 years. You could earn 5.4% on your money in other investments with equal risk. What is the most you should pay for the annuity? O $1,595.40 O $1,442.76 $1,517.12 O $1,696.61 $1,756.86
2. An investment promises to pay a perpetuity of $100 per year starting from today. If the discount rate is 10% per year, how much should you pay for this investment? A $90.9091 B $190.9091 C $1,000 D $1,100
A new investment opportunity for you is an annuity that pays $560 at the beginning of each year for 3 years. You could earn 5.4% on your money in other investments with equal risk. What is the most you should pay for the annuity? Group of answer choices $1,595.40 $1,756.86 $1,517.12 $1,442.76 $1,696.61
You just purchased an annuity that will pay you $24,000 a year for 25 years, starting today. What wasthe purchase price if the discount rate is 8.5 percent?Select one:a. $266,498b. $241,309c. $251,409d. $258,319e. $245,621

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