Interest Annuities Example 7

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  1. Avatar of elizabeth elizabeth says:
    May 17, 2013 at 3:47 am

    for the last question was lost because i dont have the question nor table……but over all its clearer

  2. Avatar of abdullahtabba abdullahtabba says:
    February 6, 2013 at 7:26 am

    An Investor Is to recieve annuity of $19260 for six year commencing at end of year 1 it has a present value of $86400.
    what is a rate of intrest??
    Answer with The Manual Calculation OF Rate OF intrest Without Using Table

  3. Avatar of esther1986 esther1986 says:
    January 16, 2013 at 12:45 pm

    hi guys pliz hlp me on this que. dont know how to solve it.

    Mr Mannaton has recently won a competition where he has the choice between receiving $5000 now or an annual amount forever starting now. (ie a level perpertuity starting immediately). the interest rate is 8% per annum. what would be the value of perpetuity to the nearest $?

    • Avatar of time2009 time2009 says:
      April 3, 2013 at 8:48 pm

      Hi there

      the perpertual annuity formula that i know is P = R over i where P is Present value and the R is payments and i is the interest. Now i think we can play with mathematics here and say since we know the present value we can multiply it by the interest to get the R which is the payments value $ 5000 x 0.08 = $400
      so $400 will be the monthly payments to be recieved indefinitely

      • Avatar of johnmoffat johnmoffat says:
        April 4, 2013 at 12:25 pm

        Not quite.
        The question says that the perpetuity starts immediately – i.e. the first receipt is at time 0 (or now).

        So…..if x is the amount per annum, then (5000 – x ).0.08 = x
        400 – 0.08x = x
        400 = 1.08x
        So x = 400 / 1.08 = 370.38 p.a.

  4. Avatar of accakeisha accakeisha says:
    December 11, 2012 at 5:51 pm

    from my calculations it is 15 yrs time and not 14 please double check your arithmetic and let me know if i am right or wrong

    • Avatar of johnmoffat johnmoffat says:
      December 12, 2012 at 6:55 pm

      @accakeisha, I am not sure which example you are referring to – there are many in this lecture.
      If you mean the one that says $5,000 is first received in 3 years time, and that there are 12 receipts in total, then my arithmetic is correct!
      The first receipt is in 3 year, the second in 4 years, the third in 5 years….if you carry on the the 12th receipt is in 14 years time.

  5. Avatar of hixam hixam says:
    November 5, 2012 at 10:07 pm

    Why its the the OT F2 Notes beck answer for question 8 is different of what sir have explained? Its printing mistakes right?

  6. Avatar of claudette claudette says:
    October 23, 2012 at 2:17 pm

    why is it 14 years less 2. thanks Teacher you are the best

    • Avatar of johnmoffat johnmoffat says:
      October 23, 2012 at 7:47 pm

      @claudette, it is because we want the total factor for years 3 to 14 inclusive.

      The 14 year factor gives the total for years 1 to 14, so we need to take off the total for years 1 and 2 (the 2 year annuity factor) to be left with the total for 3 to 14.

  7. Avatar of nhs14 nhs14 says:
    October 15, 2012 at 1:20 pm

    is the Fisher’s Price Index equally important as the above???

  8. Avatar of mellen mellen says:
    July 15, 2012 at 5:05 pm

    it’s very sad to see students remain passive in most lectures.

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