For tax reasons, your client wishes to purchase an annuity that pays $80,000 each year for...
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For tax reasons, your client wishes to purchase an annuity that pays $80,000 each year for 6 years, with the first payment in one year. At an interest rate of 8% and focusing on time value of money without consideration of any fees, how much would the client need to invest now? Equivalent problem structure (in neutral time-value-of-money terms): What is the present value of an annuity that pays $80,000 each year for 6 years, assuming a discount rate of 8% and the first payment occurs one year from now? Equivalent problem structure (as a borrower): How much could you borrow today in exchange for paying back $80,000 each year for 6 years, assuming an interest rate of 8% and the first payment occurs one year from now? Please round your answer to the nearest hundredth. For tax reasons, your client wishes to purchase an annuity that pays $80,000 each year for 6 years, with the first payment in one year. At an interest rate of 8% and focusing on time value of money without consideration of any fees, how much would the client need to invest now? Equivalent problem structure (in neutral time-value-of-money terms): What is the present value of an annuity that pays $80,000 each year for 6 years, assuming a discount rate of 8% and the first payment occurs one year from now? Equivalent problem structure (as a borrower): How much could you borrow today in exchange for paying back $80,000 each year for 6 years, assuming an interest rate of 8% and the first payment occurs one year from now? Please round your answer to the nearest hundredth.
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A 1 Formula PV of periodic paymentsAnnuity PV P111rtr 2 3 4 5 6 7 8 9 10 11 6 7 ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0078111006
14th edition
Authors: Ray Garrison, Eric Noreen and Peter Brewer
Posted Date:
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