What is the present value of the annuity

Assignment Help Financial Management
Reference no: EM131243494

Non-standard annuity Suppose annually compounded zero rates for all maturities (with 30/360 daycount) are r. An annuity pays n at times n = 1, 2, ... , N.

(a) What is the present value of the annuity?

(b) What is the present value of the infinite annuity as N → ∞?

Reference no: EM131243494

Questions Cloud

Develop an analysis of how financial management techniques : Using each of the four categories of risk, develop an analysis of how financial management techniques or policies can be used to mitigate each of the risks.
Find upper and lower bounds for the forward price : Using arbitrage arguments, find upper and lower bounds for the forward price of the stock for a forward contract with maturity T >t.
Demand curve for generic advertising : Suppose that each team in a league has a demand curve for generic advertising (a league-wide, non-tem-specific campaign) equal to Q = 1000 - 5p. If there are 20 teams in the league, and ads cost $175 each, how many ads will the teams want to purch..
Estimate the roof temperature under steady-state conditions : Explain qualitatively the effect of changes in the absorptivity, emissivity, and convection coefficient on the steadystate temperature.
What is the present value of the annuity : Non-standard annuity Suppose annually compounded zero rates for all maturities are r. - What is the present value of the annuity?
What kind of job are you most interested in : What kind of job are you most interested in? What were your most important achievements in your last position? What is your greatest strength? Why do you think you can do this job better than anyone else?
Statement represent consumer surplus : Does this statement represent consumer surplus, producer surplus, or neither? "Even though I was willing to pay up to $135 for a used laptop, I bought a used laptop for only $126."
What will be the steady-state temperature of the sphere : A sphere of 30-mm diameter whose surface is diffuse and gray with an emissivity of 0.8 is placed in a large oven whose walls are of uniform temperature at 600 K.
Calculate the equivalent interest rate : For simple interest of 5% for ten years, calculate the equivalent interest rate with (i) annual, (ii) quarterly and (iii) continuous compounding. Assume 30/360 daycount.

Reviews

Write a Review

Financial Management Questions & Answers

  Transactions takes place in secondary markets

Which of the following transactions takes place in secondary markets?

  Determining the current market price of the bonds

1. Fresh Water Inc sold an issue of 17-years $1,000 par value bonds to the public. The bonds have a 8.47 percent coupon rate and pay interest annually. The current market rate of interest on the Fresh Water, Inc bonds is 12.81 percent. What is the..

  What are the equilibrium price and quantit

What are the equilibrium price and quantity if there is no international trade? - What are the equilibrium quantities for Belgium if the nation can trade freely with the rest of the world at a price of 120?

  Value at risk for the portfolio

Consider a position consisting of a $200,000 investment in asset A and a $150,000 investment in asset B. Assume that the daily volatilities of both assets are 1% and that the coefficient of correlation between their returns is 0.35. What is the 5-day..

  Expand an existing project

S. Miller is looking to expand an existing project. The expansion requires an immediate outflow (an investment today) of $81 million. S. Miller anticipates that the project will generate one future cash flow of $175 million that will arrive at the en..

  What type of risk is allison most concerned with

Allison Peavy wants to invest but is worried about risk: In particular, she is worried that bad management and increased competition in the wireless phone market will make these companies less profitable than expected. What type of risk is Allison mo..

  Discuss the role and impact of embedded options

ALCO members are considering the following EVE sensitivity estimates. The figures refer to the percentage change in economic value of equity compared with the base rate forecast scenario. What does the information say about the bank's overall interes..

  Assume that the price of the house grows

Assume that the price of the house grows at 5.5% per year. How many years will it take for the house to reach $100 million in value? The current value of the house of $28 million.

  Create a chart summarizing the details of the investment

Create a chart summarizing the details of the investment for both Bob and Lisa. - Explain the results in terms of time value of money.

  Forecast broussards additional funds needed for coming year

Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $5 million at the end of 2013. Broussard is already at full capacity, so its assets most grow at the same rate as project..

  Retirement account rate

A 40-year-old individual establishes a retirement account that is expected to earn 7 percent annually. Contributions will be $2,000 annually at the beginning of each year. Initially, the saver expects to start drawing on the account at age 60.

  The main cost of the operation of commercial banks

Which of the following is the main cost of the operation of commercial banks?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd