Which of the following are characteristics of a perpetuity? Check all that apply. Show
Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will administer it. As you’ve committed to fund a $15,000 scholarship every year beginning one year from tomorrow, you’ll want to set aside the money for the scholarship immediately. At tomorrow’s meeting with your grandfather and the bank’s representative, you will need to deposit ___________ (rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 4.50% per annum every year. Oops! The bank representative just reported that he misquoted the available interest rate on the scholarship’s account. Your account should earn 7.00%. The amount of your required deposit should be revised to____________. This suggests there is (an inverse / a direct) relationship between the interest rate earned on the account and the present value of the perpetuity.  Q: To save for graduate school, a student invests $1020 semiannually in an ordinary annuity with 3%… A: The accumulated amount can be calculated using FV function in excel FV (rate, nper, pmt, [Pv],… Q: Find the periodic payments PMT necessary to accumulate the given amount in an annuity account.… A: Formula for calculating the annuity payment required: Annuity = Future Value / future value annuity… Q: A single life annuity pays you a set monthly payment for the rest of your life even if you live to a… A: Annuity Annuity refers to the series of payments made at the beginning, end, or any date of each… Q: Finding the compound sum of $1,000 to be received at the beginning of each of the next 5 years… A: The term annuity depicts a stream of equivalent periodic cash flows over a specific time duration.… Q: Find the value of the annuity at the end of the indicated number of years. Assume that the interest… A: Information Provided: Monthly Deposits = $100 Frequency = Monthly Rate = 6% Time = 8 years Q: erpetuity is a type of annuity which has infinite period of payments. The present value of a… A: Present Value: It represents the present worth of future cash flows. Thus, it is calculated by… Q: 1 to calculate the amount (in $) of the periodic payments needed to amount to the financial… A: Sinking fund is the amount kept aside for paying a loan or debt. Sinking fund enables the business… Q: Which of the following are characteristics of a perpetuity? Check all that apply. O In a perpetuity,… A: Since you have asked multiple questions, we will solve first question for you. If you want any… Q: A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and… A: Perpetuity means a series of infinite numbers of payments forever. A person will receive periodical… Q: Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 8%. What is the… A: A perpetuity is a payment which has no end, it continues forever. It is a stream of cash flow that… Q: what is the present value of the perpetuity? A: Present Value: It represents the present worth of the perpetual/constants cash flows. It is… Q: erpetuities are also called annuities with an extended or unlimited life. Based on your… A: Note: As per the policy we are supposed to solve one question at a time. Kindly repost the further… Q: Consider an ordinary simple perpetuity with monthly payments. If the first payment happens in one… A: Perpetuity is the type of annuity that goes on forever, that is, perpetuity has no end and is for an… Q: To save for retirement, a student invests $20 each month in an ordinary annuity with 9% interest… A: In this question future value of annuity is to be found out. Future value of annuity is the annuity… Q: Your friend has a trust fund that will pay her the following amounts at the given interest rate for… A: Given information: We need to find the current (present) value of the annuity of your friend’s… Q: A perpetuity can be described as: an annuity that lasts longer than 25 years an amount of interest… A: A perpetuity is a series of cash flows that is paid or received for an infinite period. Q: What’s the present value of a perpetuity that pays $300 per year if the appropriate interest rate is… A: present value of a perpetuity = Annual payment/Discount rate Q: The total amount of the annuity payments and the accumulated interest on those payments is known as… A: Future value is based on the concept of time value of money which states that value of money today… Q: A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and… A: We will use the concept of the time value of money here. As per the concept of the time value of… Q: how much can we paid in scolarships at the end of half year if $90.000 is deposited in a trust fund… A: Amount Deposited = $90,000 Annual Interest Rate = 8.5%Semiannual Interest Rate = 8.5% / 2Semiannual… Q: A series of equal payments occurring at equal interval of time, known as. Ans: ____________ A type… A: Annuities are one of the main means of securing steady cash flows i.e. an equal amount of dollar… Q: Use the ordinary annuity formula shown to the right to determine the accumulated amount in the… A: Principal amount = $60 Time period = 10 years Interest rate = 5% Compounded = semi-annually Q: What's the difference between an ordinary annuity and an annuity due? Why would you prefer to… A: Note: Interest arate is not provided,hence "i" is taken as 5% for calculation. Same formula can be… Q: At the beginning of each period for 11 years, Bobby Nelson invests $470 semiannually at 4%,… A: It can be calculated using FV function in excel. FV (rate, nper, pmt, [Pv], [type]) Rate The… Q: A rich relative has bequeathed you a growing perpetuity. The first payment will occur in one year… A: Growing perpetuity: These are the cashflows that grow forever and doesn't remain fixed. They keep… Q: Suppose that an individual invests $2,500 at the end of each of the next 6 years and earns an… A: Whenever we are finding present value of a series of fixed payments made in the future, it is called… Q: 6. Perpetuities Perpetuities are also called annuities with an extended or unlimited life. Based on… A: A perpetuity is a sort of security that pays for an unlimited time period. In finance, perpetuity is… Q: The present value of an annuity due is determined on the last day of the first annuity period. on… A: The present value is the value of the sum received at time 0 or the current period. It is the value… Q: Determine whether or not the following situation describes an annuity. If it is an annuity,… A: An annuity is any plan which gives a fixed payment for a predetermined period of time. It is… Q: monthly payments, antique, find the future value of the annuity. A: Future value of Ordinary Annuity: It refers to the future value of annuity payments that are made… Q: The present value of an ordinary annuity is determined on the last day of the first annuity period.… A: Present Value: The value of today’s amount to be paid or received in the future at a compound… Q: Which is NOT an essential element of an ordinary annuity? Select the correct response: The… A: Introduction : In simple words, an annuity refers to the stream of payments made by an entity to… Q: Assume that Kathy is to make annual investments of P600,000 for three years. The interest for this… A: Time value of money is a concept that helps in determining the value of future cash flows… Q: Ramesh Abdul wishes to choose the better of two equally costly cash flow streams: annuity X and… A: Using excel FV function Q: Find the value of the annuity at the end of the indicated number of years. Assume that the interest… A: Given: M=$200n= semiannually r=8%t =25 yearsn =2 Q: Which of the following statement is true? a) An ordinary annuity is an annuity in which the cash… A: Annuity can be annuity due or ordinary annuity Q: Which of the following statements is CORRECT? The cash flows for an annuity may vary from period… A: Annuities are series of regular payment over regular intervals. Two types of annuities are one… Q: Find the value of the annuity at the end of the indicated number of years. Assume that the interest… A: The concept of the time value of money states that the current worth of money is more than its value… Q: A rich relative has bequeathed you a growing perpetuity. The first payment will occur in one year… A: Payment in one year = 2000 Growth in payments = 3% Interest rate = 10% Q: Find the periodic payments PMT necessary to accumulate the given amount in an annuity account.… A: Information Provided: Future value = $80,000 Interest = 3% Term = 20 years Payments = Quarterly Q: The future value of an annuity due is: one period after the final payment. one period before the… A: In finance, the term "annuity" represents a series of equivalent periodic cash flows at equal time… Q: Find the value of the annuity at the end of the indicated number of years. Assume that the interest… A: Future value of the annuity The worth of a set of normal payments at a future date, presumptuous at… What are the characteristics of a perpetuity?A perpetuity is a type of annuity that lasts forever, into perpetuity. The stream of cash flows continues for an infinite amount of time. In finance, a person uses the perpetuity calculation in valuation methodologies to find the present value of a company's cash flows when discounted back at a certain rate.
What is a perpetuity quizlet?Perpetuities. A perpetuity is a stream of equal cash flows that occur at regular intervals and last forever. Annuities. -An annuity is a stream of N equal cash flows paid at regular intervals.
Is perpetuity repaid as lumpA perpetuity is a financial term that refers to an infinite stream of cash flows. It is an annuity with no end. a. The principle amount of perpetuity is repaid as a lump-sum amount.
What is the present value of a perpetuity quizlet?The value of a perpetuity is equal to the sum of the present value of its expected future cash flows. 2.
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Which of the following are characteristics of a perpetuity? check all that apply.
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