Please include with your response any necessary formula to solve this problem (on a regular calculator, NOT a financial calculator), along with a detailed explanation of how to solve the problem.
You are offered an annuity of $10,000 for 10 years starting four years from now. With interest rates at 5%, how much should you be willing to pay for this today?
Solution Preview
We should calculate the present value of each payment of the annuity at the end of 4th year:
The formula is PV= Annuity/(1+r)^n
Where Annuity=10000, r= 5%, and n = ...
Future value: annuity versus annuity due
What's the future value of a 7 percent, 5-year ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value be?
What is the difference between an annuity and a sinking fund? If you were to set up an annuity today to purchase something in 7 years what would it be for? If you were getting 6% compounded annually what would your payments need to be to reach your goal? What type of payments would you want to make (monthly, quarterly, yearly
Question: The $40 million lottery payment that you just won actually pays $2 million per year for 20 years. If the discount rate is 8%, and the first payment comes in 1 year, what is the present value of the winnings? What if the first payment comes immediately?
A manufacturing company wants to have $100,000 available in 5 years to replace a production line. The amount of money that would have to be deposited each year at an interest rate of 10% per year would be closest to?
a. 12,380
b. 13,380
c. 16,380
d. 26,380
Find:
- the present value of $300,000 annuity at 6% for 20 years
- the present value of $500,000 deferred annuity at 6% for 20 (21-40) years
- the present value of 50,000 annuity at 6% for 40 years
- the present value of 75 million paid at the end of 40 years
- the present value of 300,000 annuity at 11% for 20 years
- th
Sam was injured in an accident, and the insurance company has offered him the choice of $49,000 per year for 15 years, with the first payment being made today, or a lump sum. If a fair return is 7.5%, how large must the lump sum be to leave him as well off financially as with the annuity?
