This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: What is the present value today of an ordinary annuity cash flow of 3,000 per year for forty years ... (Read 98 times)

cmoore54

  • Hero Member
  • *****
  • Posts: 568
on: Jul 10, 2018
What is the present value today of an ordinary annuity cash flow of 3,000 per year for forty years at an interest rate of 10.0 per year if the first cash flow is six years from today?
 
  A) 120,000.00
  B) 1,327,777.67
  C) 45,138.89
  D) 33,730.40

Question 2

Twelve years ago, you paid for the right to twelve 25,000 annual end-of-the-year cash flows. If discounting the cash flows at an annual rate of 8, what did you pay for these cash flows back then?
 
  A) 474,428.16
  B) 300,000.00
  C) 203,474.11
  D) 188,401.95


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

honnalora

  • Sr. Member
  • ****
  • Posts: 325
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: D
Explanation: D) Although this problem is not directly addressed in the text, its intended effect is to reinforce the idea of present value. In this kind of problem, the student must find a present value in the future, and then discount that renamed future value back to the present value at time zero.
PV = PMT  / (1 + r)n = 3,000  / (1.06)5 = 33,730.40.

Answer to Question 2

Answer: D
Explanation: D)
PV = PMT  = 25,000  = 188,401.95.
MODE = END
INPUT 12 8 ? -25,000 0
KEY N I/Y PV PMT FV
CPT 188,401.95


cmoore54

  • Member
  • Posts: 568
Reply 2 on: Jul 10, 2018
Gracias!

Animal_Goddess

  • Member
  • Posts: 339
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

The training of an anesthesiologist typically requires four years of college, 4 years of medical school, 1 year of internship, and 3 years of residency.

Did you know?

The term pharmacology is derived from the Greek words pharmakon("claim, medicine, poison, or remedy") and logos ("study").

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

Long-term mental and physical effects from substance abuse include: paranoia, psychosis, immune deficiencies, and organ damage.

Did you know?

The first documented use of surgical anesthesia in the United States was in Connecticut in 1844.

Measurements of solar cycle variation during the last 30 years Measurements of solar cycle variation during the last 30 years
Vertebral compression Fractures of the spine (vertebra) can cause severe ”band-like” pain that radia Vertebral compression Fractures of the spine (vertebra) can cause severe ”band-like” pain that radia
Blood flow before TIPS Blood flow before TIPS
This portrait of Thomas Jefferson is considered an accurate likeness, painted when he was thirty-sev This portrait of Thomas Jefferson is considered an accurate likeness, painted when he was thirty-sev
Top Prescriptions for Children Under 17 Years of Age (2002–2010) Top Prescriptions for Children Under 17 Years of Age (2002–2010)
Video: Digestive System Animation

For a complete list of videos, visit our video library