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(PLEASE SHOW ALL WORK AND VALUES) (PLEASE SHOW ALL WORK AND VALUES) 23) An investment offers S4,100 per year for 15 years, with the first
(PLEASE SHOW ALL WORK AND VALUES)
(PLEASE SHOW ALL WORK AND VALUES)
23) An investment offers S4,100 per year for 15 years, with the first payment occurring one year from now. If the required return is 10 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? 24)Fill in the missing annuity in the following table for an ordinary annuity stream. Annuity Present Value S25,000.00 $200,000.00 Number of Payments or Years Annual InteresFuture Value Rate 9% 5% 7% 4% Pavment 20 30 10 S25,000.00 S96,048.86 25) County Ranch Insurance Company wants to offer a guaranteed annuity in units of S500, payable at the end of each year for twenty-five years. The company has a strong investment record and can consistently earn 7% on its investments after taxes. If the company wants to make 1% on this contract, what price should it set on it? Use 6% as the discount rate. Assume it is an ordinary annuity and the price is the same as present value. 26) A smooth used-car salesman who smiles considerably is offering you a great deal on a "preowned" car. He says, "For only six annual payments of $2,500, this beautiful 2008 Honda Civic can be yours." If you can borrow money at 8%, what is the price of this carStep by Step Solution
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