Calculate the present value of this annuity?
Regular payment: $5000 per year
Rate of Compound Interest per year: 7.2%
Compounding period: annually
Time: 5 years
If one wants to borrow $55,000 from the local bank and can only afford to make monthly payments of $1,120 but no more. Assumming monthly compounding, what is the highest rate you can afford on a 60-month APR loan?
Any help will be much appreciated.. please show work as it will help me figure out how to calculate these type of problems…Thank You in advance
I’m doing a problem where i’m calc’ing how much i should be willing to pay now (present value) for an annuity that has an interest payment (discount) of varying amounts. The high the i goes, calcs telll me the less I should give in money right now.
If its got a higher interest rate wouldn’t it be worth more in the future, so why would I pay less?
The equation I was given is
P = R((1-(1+i)^-n)/i)
P is present value of annuity, i is the interest rate per period, and n is the the number of periods.
Thanks a lot!
What is the present value of a five-year annuity; with the first $3,000 payment being made three months from today, if the required return is 7% EAR? How can I calculate can you show?
What is the present value of a semi-annual ordinary annuity payment of $7,000 made for 12 years with a required annual return of 5%?
A . $65,145
B . $128,325
C . $125,195
D . $62,043
10-yr annuities, assuming they all have the same interest rate. Which of these 10-yr annuities would have the highest present value?
One that pays $500 at the beginning of every 6 months, one that pays $500 at the end of each 6 months, one that pays $1000 at the beginning of each year, or one that pays $1000 at the end of each year?