An investment offers $5,800 per year for 20 years, with the first payment occurr

Question

An investment offers $5,800 per year for 20 years, with the first payment occurring one year from now.

If the required return is 7 percent, what is the value of the investment? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present Value

What would the value be if the payments occurred for 45 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present Value

What would the value be if the payments occurred for 70 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present Value

What would the value be if the payments occurred forever?

If the required return is 7 percent, what is the value of the investment? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present Value

What would the value be if the payments occurred for 45 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present Value

What would the value be if the payments occurred for 70 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present Value

What would the value be if the payments occurred forever?

Explanation / Answer

1)

PMT=5800

N=20

1/Y=7

FV=0

CPT

PRESS PV=61445.28

2)

PMT=5800

N=45

1/Y=7

FV=0

CPT

PRESS PV=78912.02

3)

PMT=5800

N=70

1/Y=7

FV=0

CPT

PRESS PV=82130.26

4)

hat would the value be if the payments occurred forever=5800/0.07=82857.14

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