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Calculate the present value of an ordinary annuity

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Q1. Before beginning college, Rita Rivera's parents deposited $15,000 in a 5-year certificate of deposit (CD) with Liberty Bank that pays 4% interest. Rita will receive the money, plus interest, if she finishes her high school at the end of the 5 years. Determine the balance in Rita's account after 5 years.

Q2. Suppose a Puerto Rico government bond pays $ 3,255.80 within 4 years at 4% interest. Calculate the present value of the bond. Determine the value of the bond assuming it will mature in 6 years at 5% interest.

Q3. Determine the present value of $ 2,500,000 that will be paid after 25 years if the discount rate were 7%.

Q4. Suppose the United States Federal Reserve offers a bond for $ 635.20 at 8 years of maturity. You won't have to issue payments until the maturity date, at which point you will receive $ 950. Calculate the interest rate if you decide to buy it. Determine the interest rate if you can buy it at a price of $ 555.

Q5. Suppose the company Liver Corporation earned $ 1.57 per share in 2010 and after 8 years, in 2018, the company earned $ 3.10. Determine the growth rate of earnings per share (EPS) over the 8 years.

Q6. If an investor intends to double $ 25,000 by investing in a bank that pays 7% interest per year, determine the time it would take to double the investment.

Q7. If you save money from the age of 20 and save $ 4 daily and, at the end of the year, all the savings you invest in a mutual fund account that has a 7% annual return, determine the balance of the account when you reach the 62 years.

Q8. Suppose the Land River Company decides to purchase a housing complex in 6 years and estimates that it can save $ 15,000 per year. The company deposits the money at the end of the year in World Central Bank at 5% interest. Calculate the balance after 6 years and calculate the account balance if the rate were to decrease to 4%.

Q9. The family attorney notified you that you are the sole heir to your lost uncle's legacy. You have two options to receive the inheritance: receive $ 500,000 at the end of each of the next 10 years or receive a one-time payment of $ 2,500,000. Determine which is the best option.

Q10. Calculate the Present Value of an ordinary Annuity (PVA) that includes 12 payments of $ 200 and an interest rate of 9%.

Reference no: EM132819181

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