adms_3530_assignment_1_fall_2012_solution

12 1 012 112 1409873347 1 012 1 012 112 1409873347

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Unformatted text preview: 23028 24952.52559 The annuity payment amounts should be $24,952.53 annually Page 2 of 18 #2b) r = 12% = 0.12 Perpetuity: X 80,000 0 1 2 3 4 5 6 X 7 X X X X X X 8 9 10 11 12 … X X … …….. The future value of the $80,000 after five years is 80,000 1.12 140,987.3347 We expect this to be the present value of the perpetual payments: 140,987.3347 0.12 140987.3347 0.12 16918.48016 The perpetuity payment amounts should be $16,918.48 annually Page 3 of 18 #2c) r = 3% = 0.03 Perpetuity: The future value of the $80,000 after five years is 80,000 1.12 140,987.3347 We expect this to be the present value of the perpetual payments: 0.12 140,987.3347 0.09 0.12 140,987.3347 3% 0.03 0.03 12688.86012 The perpetuity payment amounts should be $12,688.86 annually Page 4 of 18 #3...
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This note was uploaded on 03/27/2013 for the course ECON 1000 taught by Professor Paschakis during the Spring '08 term at York University.

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