1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year,each payment is increased by $300 over the payment from the previous year. Thenominal annual interest rate is 18% convertible monthly. Calculate the present valueof this annuity.2. The present value of 10-year annuity immediate with level payments and effectiveannual interest rate i is X. The present value of 20-ycar annuity immediate withthe same payment and interest rate is 1.5.X. Find i

As per the honor code, We’ll answer the first question since the exact one wasn’t specified. Please…

1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year, cach payment is increased by $300 over the payment from the previous year. The nominal annual interest rate is 18% convertible monthly. Calculate the present valuc of this annuity.

1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year, cach payment is increased by $300 over the payment from the previous year. The nominal annual interest rate is 18% convertible monthly. Calculate the present valuc of this annuity.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

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Question

1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year,
each payment is increased by $300 over the payment from the previous year. The
nominal annual interest rate is 18% convertible monthly. Calculate the present value
of this annuity.
2. The present value of 10-year annuity immediate with level payments and effective
annual interest rate i is X. The present value of 20-ycar annuity immediate with
the same payment and interest rate is 1.5.X. Find i

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You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Annuity A has 20 years annual payments as follows:- i) ii) iii) Annuity i) ii) iii) The first payment is 1000 made at the end of the first year. The subsequent payments increase by 3% from the previous years. The effective interest rate is 5% per annum. B has 20 years annual payments as follows:- The first payment is X made at the end of the first year. The subsequent payments increase by X from the previous years. The effective interest rate is 6% per annum. Annuity C is an annuity immediate of 20-year annual level payments with effective interest rate of 7% per annum. Evaluate, (a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. stelua. [3 marks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. 13 marks] Preval 13 marks
Consider two perpetuities (X and Y) at interest rate i. X provides level payments of $105 at the end of each year. Y provides a payment of $5 at the end of the first year, with payments increasing by $5 annually. Find i such that the present value of (X-Y) is a maximum. (Answer to the nearest .05%.)
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