Question

For each of the following​ cases, calculate the present value of the​ annuity, assuming the annuity cash flows occur at the end of each year.  

Annuity	Interest Rate​ (%)	Period​ (Yrs)	Present Value​ ($)
32,000	14	8
20,000	9	14

Annuity	Interest Rate​ (%)	Period​ (Yrs)	Present Value​ ($)
32,000	14	8	____   ​(Round to the nearest​ cent.)

Answer 1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

1.Present value=32,000[1-(1.14)^-8]/0.14

=32,000*4.63886389

=$148443.64(Approx)

2.Present value=20,000[1-(1.09)^-14]/0.09

=20,000*7.78615039

=$155723.01(Approx).