A fianncial security generates a cash flow of 2 million every five years forever with the first cash flow occuring in two years' time.The appropriate opportunity cost is 10% p.a. compounded annually.What should be the security's price today?
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A fianncial security generates a cash flow of 2 million every five years forever with the first cash flow occuring in two years' time.The appropriate
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- You are investigating an investment opportunity. The security requires you to make monthly payments of $100 each ( 1^("st ") payment is 1 month from today), over the next 10 years. It offers a nominal annual return of 6% with quarterly compounding. What is the future value of this security at the end of its life (including all your payments and all interest)You are considering an investment in a 40-year security. The security will pay $25 a year at the end of each of the first three years. The security will then pay $30 a year at the end of each of the next 20 years. The discount rate is assumed to be 8 percent, and the current price (present value) of the security is $360.39. Given this information, what is the equal annual end-of-year payment to be received from year 24 through year 40You are considering an investment in a 40-year security. The security will pay $25 a year at the end of each of the first three years. The security will then pay $30 a year at the end of each of the next 20 years. The nominal interest rate is assumed to be 8%, and the current price (present value) of the security is $360.39. Given this information, what is the equal annual payment to be received from Year 24 through Year 40 (for 17 years)?
- An investment will pay 13400 in five years what is the present value of this investment today if the annual risk-free interest rate is 4% ?An investment offers $6,300 per year, with the first payment occurring one year from now. The required return is 5 percent. What would the value be today if the payments occurred for 10 years? What would the value be today if the payments occurred for 35 years? What would the value be today if the payments occurred for 65 years? What would the value be today if the payments occurred forever?Answer the following questions:a. Assuming a rate of 10% annually, find the FV of $1,000 after 5 years.b. What is the investment’s FV at rates of 0%, 5%, and 20% after 0, 1, 2, 3, 4, and 5 years?c. Find the PV of $1,000 due in 5 years if the discount rate is 10%.d. What is the rate of return on a security that costs $1,000 and returns $2,000 after 5 years?e. Suppose California’s population is 36.5 million people and its population is expectedto grow by 2% annually. How long will it take for the population to double?f. Find the PV of an ordinary annuity that pays $1,000 each of the next 5 years if theinterestrate is 15%. What is the annuity’s FV?g. How will the PV and FV of the annuity in part f change if it is an annuity due?h. What will the FV and the PV be for $1,000 due in 5 years if the interest rate is 10%,semiannual compounding? i. What will the annual payments be for an ordinary annuity for 10 years with a PV of$1,000 if the interest rate is 8%? What will the payments be if this…
- an investment offers 3850 per year for 15 years, with the first payment occurring one year from now. If the required return is 6 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?An investment will pay ¥13,400 in five years. What is the present value of this investment today if the annual risk-free interest rate is 4%? Round your answer to the nearest yen.You decide to invest $14.4k today into a security that will make fixed annual payments to you of $3620 beginning next year. If the expected rate of return is 3.1 %, then for how many years will you receive payments? (Round to the nearest tenth)
- I need a detailed explanation and assistance to solve this problem: An investment offers $6,800 per year for 20 years, with the first payment occuring one year from now. a) If the required return is 7%, what is the present value of the investment? b) at 7% return, what would the value be today, if the payments occured for 45 years? c) What would the present value be, if the payments occured for 70 years? d) What would the present value be, if the payments occured forever?You have $1725 to invest. You know that a particular investment will double your money in five years. How much will you have in 10 years if you invest in this investment, assuming that the annual rate of return is guaranteed for the time period? Cevap:A perpetuity will make its first payment in 20 years. The first payment will be $5,000, and future payments will increase at a 10 percent annual rate. What is the present value of this investment, assuming a 10% discount rate? Place Answer in Blank Above. What is the difference between a perpetuity and a growing perpetuity? What are real-world examples of each?