My question is Q 53- Calculating Annuities Due. Thank you!
a . Ir the p late s t rate is 7 percent, what is the present value of you KAR U APRO4 You have just purchased a new warehouse. To fine the chose you've arrange for a 10-year mortgage loan for NO percent of che vie. The wonthly payment on this loan will be $13.400 is the APR on this loan? The EAR? Pesent Value and BreakEven Interest (LO11 Consider a firm with a contra sell an asset for S157.000 four years from now. The asset costs $91,700 to pred Boxtay Civen a relevant discount rate of 13 percent per year, will the firm make profit on this asset? At what rate does the firm just break even? Present Value and Multiple Cash Flows LO11 What is the value today of per year at a discount rate or 9 percent, if the first payment is received 6 years find day and the last payment is received 20 years from today? Variable Interest Rates 011 A 15-year annuity pays $1,340 per month, and ments are made at the end of each month. If the interest rate is 10 percent compound monthly for the first seven years, and 6 percent compounded monthly thereafter what is the present value of the annuity? 19. Comparing Cash Flow Streams (LO1] You have your choice of two investmen onts. Investment A is a 13-year annuity that features end-of-month $1,100 pay. and has an interest rate of 7.5 percent compounded monthly. Investment Bis continuously compounded lump sum investment, also good for 13 years ey would you need to invest in B today for it to be worth as much as - 3 years from now? seco Value of a Perpetuity (LO1] Given an interest rate of 4.1 per S e e at date = 7 of a perpetual stream of $5,200 payments that begins atste ? = 152 51. Calculating EAR A local finance company quotes an interest rate of 16.5 percent on one-year loans. So, if you borrow $25,000, the interest for the year will be $4.125. Because you must repay a total of S29,125 in one year, the finance company requires you to pay $29,125/12. or $2.427.08, per month over the next 12 months. Is the interest rate on this loan 16.5 percent? What rate would legally have to be quoted? What is the effective annual rate? 52. Calculating Present Values (LO1] A five-year annuity of ten $7.100 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 8 percent compounded monthly, what is the value of this annuity five years from now? What is the value three years from now? What is the current value of the annuity? 53. Calculating Annuities Due [LO1] Suppose you are going to receive $15.800 per year for five years. The appropriate interest rate is 7.9 percent. a. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? b. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are an annuity due! c. Which has the highest present value, the ordinary annuity or annuity due? Which has the highest future value? Will this always be true? 54. Calculating Annuities Due [LO1] You want to buy a new sports car from Muscle Motors for $68,000. The contract is in the form of a 60-month annuity due at an APN of 6.4 percent. What will your monthly payment be
