homework finance 3_5

Example of infrequent annuity

100 once every 2 years

how much is 100 worth t 10% IR at the end of each year forever worth today?

100/.1 = 1000

What is true about the growing perpetuity model assumptions

IR must exceed growth rate cash flows at reg intervals cash flow is used for that next year

which of the following are annuities Tips to waiter Monthly grocery bill Installment loan payments Monthly rent expenses in a lease

Installment loan payments monthly rent

If IR go up, the PV of a perpetuity will

decrease

in the formula for the future value of an annuity , the expression in brackets is equal to the :

future value interest factor for an annuity

A stream of cash flow that grows at a constant rate for a finite period is called a(n)______

growing annuity

In an infrequent annuity, the payments occur

less than once a year

Which of the following are examples of real world annuities preferred stock dividends pensions common stock dividends mortgages

pensions mortgages