Annuities

Question 5 (10 Points)

a) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting next year, and during 10 years. Calculate the future value of the immediate annuity under yearly profitability of 6%. (2.5 Points)

b) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting next year, and during 10 years. Calculate how much your company should invest today in order to obtain a yearly profitability of 4%. (2.5 Points)

c) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting in 5 years, and during 10 years. Calculate the future value of such delayed annuity under yearly profitability of 6%. (Same as the previous exercise, but it will start generating cashflows in 5 years instead of next year) Please show the workout and all the steps you follow to reach the final results. (2.5 Points)

d) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting in 5 years, and during 10 years. Calculate how much your company should invest today in order to obtain a profitability of 6%. Please show the workout and all the steps you follow to reach the final results (2.5 Points)