Purchase Solution

Annuity Calculations

Not what you're looking for?

Ask Custom Question

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?

Purchase this Solution
Solution Summary

The solution answers the question(s) below.

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 = ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Calculations for an ordinary annuity vs an annuity due

    191289 Calculations for an ordinary annuity vs an annuity due CASE AMOUNT OF ANNUITY INTEREST RATE DEPOSIT PERIOD (YR) A $2,500 8% 10YRS B 500 12

  • Present value of an annuity

    455246 Compute the present value of an annuity a. What is the present value of a 3-year annuity of $170 if the discount rate is 5%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $ b.

  • Comparing Investments

    Show calculations to support results. A 2-year $1,000 par zero-coupon bond is currently priced at $819.00. A 2-year $1,000 annuity is currently priced at $1,712.52.

  • Time Value of Money

    However, when doing the calculations for the next steps, use the complete number (without rounding) for the calculations.) Requirement 1: (a) What is the present value of the payments if they are in the form of an ordinary annuity?

  • Present value of annuity

    Explain the concept and the calculations. In this we will apply present value of annuity.

  • Present and Future Value Calculations

    111852 Present and Future Value Calculations When would we use present value calculations? When would we use future value calculations? Which is more likely to be used in accounting and why?

  • PV of the quarterback

    (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value= _______________ million b. Calculate the PV of the receiver. (Do not round intermediate calculations.

  • Present Value of Annuity Streams

    Excel is used for future value calculations. Inputs for present value calculations are identified and can be easily plugged in to a financial calculator. Adjustments for PV of an annuity in advance from an annuity in arrears are calculated as well.

  • Amount of Each Annuity Payment

    Thank you for allowing me to assist you. **** Thanks, Rahul Jain OTA # 104898 (Already done 6950+ Postings with rating 4.9/5) Brief calculations show how to find the annuity payments when given present value and interest rate.

  • Calculate the net present value of a car down payment.

    What happens to the above calculations when the interest rate is 0%?

View More Related Solutions