# Question: Calculate the following assume all payments are made at the

Calculate the following (assume all payments are made at the end of the year).

a. What is the value today of a $10,000 payment made in perpetuity assuming a 8% discount rate?

b. Assume the same perpetuity as above but the payments will not begin for another five years. What is the present value of such a perpetuity?

c. What is the present value of a 5 year annuity which pays $10,000 per year and with an interest rate of 8%?

d. You are told you will receive the following cash payments at the end of the next three years:

Year 1: ...... $10,000

Year 2: ...... $25,000

Year 3: ...... $50,000

Assuming a discount rate of 12%, what is present value of all payments?

a. What is the value today of a $10,000 payment made in perpetuity assuming a 8% discount rate?

b. Assume the same perpetuity as above but the payments will not begin for another five years. What is the present value of such a perpetuity?

c. What is the present value of a 5 year annuity which pays $10,000 per year and with an interest rate of 8%?

d. You are told you will receive the following cash payments at the end of the next three years:

Year 1: ...... $10,000

Year 2: ...... $25,000

Year 3: ...... $50,000

Assuming a discount rate of 12%, what is present value of all payments?

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