Problem $8$

His recently departed Uncle Jimmy, may he rest in peace, has left John a $25-$year annuity $(25$ annual payments$).$ He

will receive the first payment of $$5,000$ in $4$ years from today, and payments will grow at a constant rate of $5\%$ per

year thereafter. What is the present value of his inheritance if he is discounting at a$)3\%($EAR$)$; b$)5\%($EAR$)$; and

c$)10\%($EAR$)?$ Problem $8)$ a$)$ What is the present value of his inheritance if he is discounting at $3\%($EAR$)$

Question $12$Select one:

$$137,125$

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$$82,432$

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$$141,239$

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$$154,335$

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No solution, r $<$ g

cross out Problem $8)$ b$)$ What is the present value of his inheritance if he is discounting at $5\%($EAR$)$

Question $13$Select one:

$$119,048$

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$$125,000$

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$$100,000$

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$$102,838$

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No solution, r $=$ g

cross out Problem $8)$ c$)$ What is the present value of his inheritance if he is discounting at $10\%($EAR$)$

Question $14$Select one:

$$51,649$

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$$46,954$

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$$190,003$

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$$68,745$

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No solution, r $>$ g

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