You have a sub-contracting job with a local manufacturing firm. Your agreement calls for annual payments of $82,000 for the next 3 years. At a discount rate of 9.5%, what is this job worth to you today?

You are expecting annual cash flows of $10,000 in years 1-5; $15,000 in years 6-10; and $25,000 in years 11-25. If the rate of interest is 6% compounded annually, calculate the present value of this cash flow stream.

 

Moe purchases a $100, 30-year annuity. Larry purchases a $100 perpetuity. In both cases, payments begin in one year, and the appropriate interest rate is 10%. What is the present value of Larry's payments that will occur from year 31 onwards?

You just won the lottery. You and your heirs will receive $25,000 per year forever, beginning one year from now. If the present value of the lottery is $416,667, what is the discount rate used to value this perpetuity?

Marie has a $400,000 investment and she wishes to withdraw $69,000 per year as an ordinary annuity. If the investment account earns 8% annually, how long will her portfolio last?

Answer rating: 100% (QA)

1 To calculate the present value of the subcontracting job we can use the formula for the present value of an annuity PV A 1 1 rn r where PV is the pr... View the full answer