Find the value of an annuity in which $1,100 is deposited at the end of each year for 5 years, at an interest rate of 11.5% compounded annually.
Posts Tagged ‘Value’
If the interest rate is negative, present value of an annuity due would be?
22
Aug
If the interest rate is positive, the the present value of an ordinary annuity will less than the present value of the annuity due.
What would happen opposite?
What nominal interest rate must the analyst be using to find the future value in this problem?
03
Aug
If it were evaluated with an interest rate of zero percent, a 10-year ordinary annuity would have a present value of $4,000. If the future (compounded) value of this annuity, evaluated at Year 10, is $6,425, what nominal interest rate must the analyst be using to find the future value?
I can see two different ways of doing this problem.
1) With a $4,000 present value at a zero interest rate, the payment amount is equal to the present value divided by the number of periods (10). Thus, the payment amount is 400.
Now that we have the payment amount, we can plug in the rest of the data into the calculator:
FV=6425
PMT=400
N=10
I/Y=?
Computed: I/Y=10.16296890% or 10.16%
or
2)
PV=4000
FV=6425
N=10
I/Y=?
Computed? I/Y=4.85310944
Which one (if either) is correct?
Present value index help please!!!?
18
Jul
A project has estimated annual net cash flows of $82,000 for five years and is estimated to cost $259,000. Assume a minimum acceptable rate of return of 12%. Using the Present Value of an Annuity of $1 at Compound Interest table below, determine (1) the net present value of the project and (2) the present value index, rounded to two decimal places.
If required, use the minus sign to indicate negative numbers.
*** What is the Present value index(rounded to two decimal places) if the Net present value of the project is $36,610.00. The answer is not 0.85
Thank you
The future value of an annuity type of investment is given by the expression , where n is the number of perio?
15
Jun
The future value (F of n) of an annuity type of investment is given by the expression (F of n)= P((1+i)^n-1)/i, where n is the number of periodic payments P and i is the interest rate over the period of each payment. Tolliver plans to save $1,500 each year for 18 years, at an annual interest rate of 6.6%.
a. How much will he have in his account at the end of that time?
b. How much will he have if he saves $1,200 for 18 years at 7.25%?
What is the future value of the given ordinary annuity?
03
Jun
$600 per quarter for four years at the rate of 8% compounded quarterly. Please show me the work if you are able to complete this as it would help me understand the concept! Thanks!
What is the difference between a blend, value, and growth mutual fund? What is the best fund?
31
May
Can anyone tell me the difference between a blend, value, and growth mutual fund. Also in any kind of mutual fund, what is the best one to buy? Include what fund and what kind (blend, value, or growth), and why. Also include personal experiences if possible.
What is the present value of an ordinary 12 year annuity that pays $1000 per year when the interest rate is?
24
May
$7,942.70
$7,576.30
$7,500
$7,761.20
What is the future value of a 5-year annuity due that promises to pay you $300 each year? Assume that all paym
24
May
What is the future value of a 5-year annuity due that promises to pay you $300 each year? Assume that all payments are reinvested at 7 percent a year, until Year 5.
Present Value interest factor of annuity?
23
May
How do I calculate present value interest factor of annuity from this information.
The company plans to purchase a new piece of equipment (to be used over a six year period) for $320,000.
Assume the cash flows and depreciation (based upon the use of the 5-year MACRS Schedule and Table 12-9) for the new equipment is as follows:
Cash Flow Depreciation
1 $120,000 $64,000
2 105,000 102,400
3 80,000 61,440
4 65,000 36,800
5 53,000 36,800
6 45,000 18,560
The firm has a 36 percent tax rate. Assuming depreciation is the only expense and based upon the cost of capital of 10%
Explain the differences & settlement regarding Actual Cash Value & Replacement Cost on a homeowners policy?
22
May
How would a claim be settled?
The future value of an annuity is A=$32,000. Periodic payments are made quarterly got four years?
18
May
and the annuity earns 8 % compounded quarterly. Find the periodic payments.
a. $422.40
b. $1,716.80
c. $2, 000 .00
d. $ 2, 160.00
The concept of time value of money is important to financial decision making because..?
15
May
a. it emphasizes earning a return on invested capital
b. it recognizes that earning a return makes $1 worth more today than $1 received in the future
c. it can be applied to future cash flows in order to compare different streams of income
d. all the above
As the discount rate becomes higher and higher, the present value of inflows approaches…
a. 0
b. minus infinity
c. plus infinity
d. need more information
You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?
a. Present value of an annuity of $1
b. Future value of an annuity
c. Present value of $1
c. Future value of $1
As the interest rate increases, the present value of an amount to be received at the end of a fixed period…
a. increases
b. decreases
c. remains the same
d. not enough information to tell
As the time period until receipt increase, the present value of an amount at a fixed interest rate…
a. decreases
b. remains the same
c. increases
d. not enough information to tell
Mr Blochins is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?
a. $11,250
b. $12,263
c. $24,003
d. $23,079
Mr. Nailor invests $5,000 in a certificate of deposit at his local bank. He receives annual interest of 8% for 7 years. How much interest will his investment earn during this time period?
a. $2,915
b. $3,570
c. $6,254
d. $8,570
Sharon Smith will receive $1million in 50 years. The discount rate is 14. As an alternative, she can receive $2,000 today. Which should she choose?
a. the $1 million dollars in 50 years
b. $2,000 today
c. She should be indifferent
d. need more information
Mr. Fisher wants to build a house in 10 years. He estimates that the total cost will be $170,000. If he can put aside $10,000 at the end of each year, what rate of return must be earn in order to have the amount needed?
a. between 11% and 12%
b. between 8% adn 9%
c. 17%
d. none of the above
The shorter the length of time between a present value and its corresponding future value…
a. the lower the present value, relative to the future value.
b.the higher the present value, relative to the future value.
c.the higher the interest rate used in the present-valuation.
c. none of the above
A dollar today is worth more than a dollar to be received in the future because…
a. the dollar can be invested today and earn interest
b. of the risk of nonpayment in the future
c. inflation will reduce purchasing power of a future dollar
d. none of the above
The higher the rate used in determining the future value of a $1 annuity…
a.the smaller the future value at the end of the period.
b. the greater the future value at the end of a period.
c. the greater the present value at the beginning of a period.
d. None of the above – the interest has no effect on the future value of an annuity.
Mr. Darden is selling his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment? …
a. 3%
b. Between 14% and 16%
c. 13%
d. none of the above