3. A court orders the following settlement: an annuity that will pay $150,000 at the end of eac next 10 years and $300,000 at the end of each of the 5 following years. At an annual effective interest rate of 6%, what is the present value of the annuity?
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- Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.A perpetuity of $1 each year, with the first payment due immediately, has a present value of $25 at an annual effective rate of i%. The owner exchanges it for another perpetuity with the first payment due immediately and subsequent payments due at two year intervals. What should the payment of the second perpetuity be, in order to keep the same interest rate, i%, and the same present value? A B с D E Less than $1.90 At least $1.90, but less than $1.94 At least $1.94, but less than $1.98 At least $1.98, but less than $2.02 $2.02 or moreA company will receive payments of $1,500 per year for the next four years under a subscription contract. The first payment will be made at the beginning of the contract. Assuming an annual interest rate of 3% is appropriate, the present value of an ordinary annuity is 3.71710 x $1,500 = $5,576, and the present value of an annuity due is 3.82861 x $1,500 = $5,743. Which amount must the company record for this sale in accordance with generally accepted accounting principles (GAAP) if collection is reasonably assured? $0 $5,576 $6,000 $5,743
- A 30-year annuity is arranged to pay off a loan taken out today at a 5% annual effective interest rate. The first payment of the annuity is due in ten years in the amount of 1,000. The subsequent payments increase by 500 each year. Calculate the amount of the loan. (A) 58,283 (B) 61,197 (C) 64,021 (D) 64,257 (E) 69,211A company will receive payments of $8,000 per year for the next five years under a subscription contract. The first payment will be made at the beginning of the contract. Assuming an annual interest rate of 4% is appropriate, the present value of an ordinary annuity is 4.45182 x $8,000 = $35,615, and the present value of an annuity due is 4.62990 x $8,000 = $37,039. Which amount must the company record for this sale in accordance with generally accepted accounting principles (GAAP) if collection is reasonably assured? $37,039 $0 $40,000 $35,615a) Find the present value of a twenty-year temporary life annuity issued to (45) which provides for annual payments beginning at once with a payment of 3,000USD and increasing by 200USD each year until 5,000USD is reached, after which the payments decrease by 100USD annually for the remainder of the term.
- Mr. Espinoza's debt of P160,000 is amortized by making equal payments at the end of every three months for six years with 4.3% interest rate compounded quarterly. How much is the quarterly payment? Construct an amortization schedule. How much will Mr. Espinoza pay after the term? Do you think that the total amount paid is fair given the total interest and the term of the annuity? Why or why not? Explain in your own words.For $10,000, you can purchase a five-year annuity that will pay $ 2,504.57 per year for five years. The payments occur at the end of each year. Calculate the effective annual interest rate implied by this arrangement.Provide manual solutions to below mentioned problems. An engineer is entitled to receive P25,000 at the beginning of each year for 18 years. If the rate of interest is 4% compounded annually. 1. What is the present value of this annuity at the time he is supposed to receive the first payment?2. What is the sum of this annuity at the end of the 18th year?3. Find the difference between the sum of this annuity which is paid at the beginning of each year and an annuity paid at the end of each year. Answer. 1. P329,141.72 2. P666,780.73 3. P25,645.41
- A perpetuity will pay $800 per year, starting five years after the perpetuity is purchased. What is the present value (PV) of this perpetuity on the date that it is purchased, given that the interest rate is 3%?A perpetuity will pay $736 per year, starting five years after the perpetuity is purchased. (The first payment is precisely 5 years after purchase.) What is the present value (PV) of this perpetuity on the date that it is purchased, given that the interest rate is 9 % ?An engineer is entitled to receive P25,000 at the beginning of each year for 18 years. If the rate of interest is 4% compounded annually. 1. What is the present value of this annuity at the time he is supposed to receive the first рayment? 2. What is the sum of this annuity at the end of the 18th year? 3. Find the difference between the sum of this annuity which is paid at the beginning of each year and an annuity paid at the end of each year. Ans. 1. Р329,141.72 2. Р666,780.73 3. Р25,645.41
