(Present value of an annuity due) Determine the present value of an annuity due of $2,000 per year for 8 years discounted back to the present at an annual rate of 6 percent. What would be the present value of this annuity due if it were discounted at an annual rate of 11 percent? a. If the annual discount rate is 6 percent, the present value of the annuity due is $. (Round to the nearest cent.) b. If the annual discount rate is 11 percent, the present value of the annuity due is $ (Round to the nearest cent.)

(Present value of an annuity due) Determine the present value of an annuity due of $2,000 per year for 8 years discounted back to the present at an annual rate of 6 percent. What would be the present value of this annuity due if it were discounted at an annual rate of 11 percent? a. If the annual discount rate is 6 percent, the present value of the annuity due is $. (Round to the nearest cent.) b. If the annual discount rate is 11 percent, the present value of the annuity due is $ (Round to the nearest cent.)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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(Present value of a perpetuity) At a discount rate of 13.00%, find the present value of a perpetual payment of $1,500 per year. If the discount rate were lowered to 6.50%, half the initial rate, what would be the value of the perpetuity? a. If the discount rate were 13.00%, the present value of the perpetuity is $ (Round to the nearest cent.) b. If the discount rate were lowered to 6.50%, half the initial rate, the present value of the perpetuity is $ (Round to the nearest cent.)
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a. What is the present value of a 3-year annuity of $280 if the discount rate is 6%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of the annuity in (a) if you have to wait an additional year for the first payment? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
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