Question: A perpetuity pays 100 per year and interest rates are
A perpetuity pays $100 per year and interest rates are 7.5 percent. How much would its value change if interest rates increased to 9 percent? Did the value increase or decrease?
Answer to relevant QuestionsA perpetuity pays $50 per year and interest rates are 9 percent. How much would its value change if interest rates decreased to 7.5 percent? Did the value increase or decrease? What annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $75,000 in six years? Given a 9 percent interest rate, compute the year 6 future value if deposits of $1,500 and $2,500 are made in years 2 and 3, respectively, and a withdrawal of $600 is made in year 5. Ross has decided that he wants to build enough retirement wealth that, if invested at 7 percent per year, will provide him with $3,000 of monthly income for 30 years. To date, he has saved nothing, but he still has 20 years ...If the present value of an ordinary, 6-year annuity is $8,500 and interest rates are 9.5 percent, what’s the present value of the same annuity due?
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