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Calculating Present Values and Growing Annuity Perpetuity

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I would like to have the solution to the following sample problems in EXCEL format so that I can see the formulas used. Thanks

1. What is the present value of a series of payments received each year for 9 years, starting with $300 paid one year from now and the payment growing in each subsequent year by 3%? Assume a discount rate of 5%.

Please round your answer to the nearest cent.

2. What is the present value of a series of payments received each year for 6 years, starting with $500 paid one year from now and the payment growing in each subsequent year by 5%? Assume a discount rate of 8%.

Please round your answer to the nearest cent.

3. What is the present value of a series of payments received each year forever, starting with $100 paid one year from now and the payment growing in each subsequent year by 6%? Assume a discount rate of 9%.

Please round your answer to the nearest cent.

4. What is the present value of a series of payments received each year forever, starting with $400 paid one year from now and the payment growing in each subsequent year by 9%? Assume a discount rate of 11%.

Please round your answer to the nearest cent.

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Solution Summary

The solutions provides details on how to calculate present value of growing annuity and growing perpetuity.

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See Also This Related BrainMass Solution

Present & Future Values, Annuity Payments, Growing Perpetuitya

5.1 Future value: Chuck Tomkovick is planning to invest $25,000 today in a mutual fund that will provide a return of 8 percent each year. What will be the value of the investment in 10 years?

5.30 Patrick Seeley has $2,400 that he is looking to invest. His brother approached him with an investment opportunity that could double his money in four years. What interest rate would the investment have to yield in order for Patrick's brother to deliver on his promise?

6.18 Growing perpetuity: You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $20,000 at the end of this year and subsequent payments that will thereafter grow at a rate of 3.4 percent annually. If you use a 9 percent discount rate for investment products, what is the present value of this growing perpetuity?

6.22 Computing annuity payment: Gary Whitmore is a high school sophomore. He currently has $7,500 in a money market account paying 5.65 percent annually. He plans to use this and his savings over the next four years to buy a car at the end of his sophomore year in college. He estimates that the car will cost him $12,000 in four years. How much should he invest in the money market account every year for the next four years if he wants to achieve his target?

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