PLEASE HELP ME WITH THIS EXERCISES-EXPLAIN HOW YOU GOT THE ANSWER-THANK YOU The
ID: 1175081 • Letter: P
Question
PLEASE HELP ME WITH THIS EXERCISES-EXPLAIN HOW YOU GOT THE ANSWER-THANK YOU
The future value of an ordinary annuity of $2,000 each year for ten years, deposited at 12 percent, is ________.
The present value of an ordinary annuity of $2,000 each year for ten years, deposited at 12 percent, is ________.
The present value of an annuity due of $2,000 each year for ten years, deposited at 11 percent, is ________.
The future value of an annuity due of $2,000 each year for 10 years, deposited at 11 percent, is ________.
The cash flow $2,000,000 will generate if invested at eight percent generate in perpetuity is_______.
The amounted needed to generate $175,000 at eight percent in perpetuity is_______.
Explanation / Answer
Present Value = $ 2,000 * 1/(1.12) ^ 1 + $ 2,000 * 1/(1.12) ^ 2 + $ 2,000 * 1/(1.12) ^ 3 + .... +$ 2,000 * 1/(1.12) ^ 10
= $ 11,300.45
Future Value = Present Value * ( 1+ Rate of Interest /100) ^ Time
= $ 11,300.45 * ( 1+12/100) ^ 10
= $ 35,097.48
Hence the correct answer is $ 35,097.48
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Present Value = $ 2,000 * 1/(1.12) ^ 1 + $ 2,000 * 1/(1.12) ^ 2 + $ 2,000 * 1/(1.12) ^ 3 + .... +$ 2,000 * 1/(1.12) ^ 10
= $ 11,300.45
Hence the correct answer is $ 11,300.45
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Present Value = $ 2,000 * 1/(1.11) ^ 1 + $ 2,000 * 1/(1.11) ^ 2 + $ 2,000 * 1/(1.11) ^ 3 + .... +$ 2,000 * 1/(1.11) ^ 10
= $ 11,778.46
The present value of an annuity due = Present Value of Ordiniary Annuity * ( 1+ Rate of Interest /100)
= $ 11,778.46* (1+11/100)
= $ 13,074.0906
Hence the correct answer is $ 13,074.09
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Future Value of Annuity = Periodic Payment * [ {( 1+Rate of Interest /100) ^ Time Period -1 }/ Rate of Interest]
= $ 2,000 * [ { ( 1+11/100) ^ 10 - 1 } / 11%]
= $ 33,444.02
The future value of an annuity due = Future Value of Annuity * ( 1+ Rate of Interest )//
= $33,444.02 * ( 1+11/100)
= $ 37,122.86
Hence the correct answer is $ 37,122.86
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Cash Flow = Amount / Rate of Interest
= $ 2,000,000 / 8%
= $ 25,000,000
Hence the correct answer is $ 25,000,000
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Amount Required = $ 175,000 * 8%
= $ 14,000
Hence the correct answer is $ 14,000
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