Calculate annual cash flows from fixed payment annuity

Assignment Help Financial Management

Reference no: EM131349182

a. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.4 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Annual cash flows $

b. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.4 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of six years. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Annual cash flows $

c. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $240,000 for 20 years? Assume that the annuity will earn 10 percent per year. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Present value $

Reference no: EM131349182

Questions Cloud

Discuss the different cash flow methods in valuations : Cash flow analysis is utilized by CFOs and other managers to assess a company’s operational financial health, but it is also used in business valuations. Please discuss the different cash flow methods in valuations of a business and highlight the adv..

Dollar return on this investment over the past year : Suppose you bought a 6 percent coupon bond one year ago for $950. The bond sells for $995 today. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? What was your total nominal rate of return on this..

Average real return on crash-n-burn stock : You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 5 percent, -14 percent, 26 percent, 22 percent, and 16 percent. The average inflation rate over this period was 3.2 percent and the average T-bill rate w..

Estimate the current market value of debt and equity : Hugo Boss AG is a German luxury fashion and style house that is examining its financing policy for possible changes. The firm has 8-year coupon bonds outstanding with a face value of $ 400 million and interest expenses of $18.0 million a year. Estima..

Calculate annual cash flows from fixed payment annuity : Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1.4 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the cu..

How many performance obligations are in this contract : On May 1, 2016, Meta Computer, Inc., enters into a contract to sell 5,500 units of Comfort Office Keyboard to one of its clients, Bionics, Inc., at a fixed price of $94,600, to be settled by a cash payment on May 1. How many performance obligations a..

What is firm cost of preferred stock : Grill Works and More has 5 percent preferred stock outstanding that is currently selling for $57 a share. The stock's par value is $100. The market rate of return is 7 percent and the firm's tax rate is 34 percent. What is the firm's cost of preferre..

Bonds make semiannual payments-common stock : Consider the following information for Evenflow Power Co., Debt: 3,500 8 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 102 percent of par; the bonds make semiannual payments. Common stock: 84,000 shares outstan..

Descriptive analysis of the statistical moments : Provide a written descriptive analysis of the statistical moments. For example; the first, second, third, fourth, etc. Be sure to include the cumulants and L-moments. You do not need to include the equations.

User Account

All Pages