Answer to Question a) Present Value of a single Cash flow = 14,000/(1 + 0.08)^7 = 14000*0.583490 = $8,169 (Ans)
Answer to Question b) We know that Future Value (FV) = P V * (1 + r)^n,
Where, r = rate of interest = 7%
n = No of years or periods.
PV = Present Value = $ 5,820
FVF = Future Value Factor
Now, we get, 10000 = 5820 * (1 + 0.07)^n
Or, 1.7182 = (1 + 0.07)^n
Now, by looking in to the Future Value FactorTable(or by using calculator), we find out that FVF(7%,8 years) = 1.7182.
Therefore, n = 8 years (approx.) or 96 months (Ans.)
Answer to Question c) Given Present Value of several Cash flows for a 25year annuity = $49,113
Rate of Interest(r) = 9%
No of Years(n) = 25 years
PVAF = Present Value Annuity Factor
Now we got, Present value = Cash Flows * PVAF (r, n)
49,113 = Cash Flows * PVAF (9%, 25years)
49,113 = Cash Flows *9.82257960421 (PVAF can be calculated in Calculator)
Therefore, Cash Flows = 49,113/9.82257960421 = $5,000 (Ans)
Answer to Question d) Let Rate of Interest be r
Amount (A) = $4,000
Principal (P) = $2,542
No of years (n) = 4 years
Therefore, by formula of Compounding Interest,
Amount = Principal * (1 + r)^n
Or, 4000 = 2542 * (1 + r)^4
Or, (1 + r)^4 = 4000/2542 = 1.573564
Or, (1 + r) = (1.573564)^1/4 = 1.12
Or, r = 1.12 – 1 = 0.12 or 12% (Ans.)
Answer to Question e) ) Given Present Value of several Cash flows for a 25year annuity = $17,119
Rate of Interest(r) = r
No of Years(n) = 15 years
Annual Cash Flows = $2,000
PVAF = Present Value Annuity Factor
Now we got, Present value = Cash Flows * PVAF (r, n)
17,119 = 2,000 * PVAF(r, 15years)
Or, PVAF(r, 15years) = 17,119/2,000 = 8.5595
Now, by looking in to the Present Value Annuity Factor Table(or by using calculator), we find out that PVAF(r,15 years) = 8% (Ans.)
Exercise A3-17 Present Values Use Present Value Tables or your calculator to complete the requirements below....
Exercise A3-11 Practice with Tables Use Future Value Tables and Present Value Tables, or your calculator, to complete the requirements below. Required: Round your answers to the nearest cent. a. Determine the future value of a single cash flow of $5,000 that earns 7% interest compounded annually for 10 years. $ b. Determine the future value of an annual annuity of 10 cash flows of $500 each that earns 7% compounded annually. $ c. Determine the present value of $5,000...
Use Future Value Tables or your calculator to complete the requirements below. Determine the size of annual cash flows for an annuity of nine cash flows that will produce a future value of $79,428.10 at an interest rate of 9% per year. Round your answer to the nearest cent. THE ANSWER IS NOT 6,100
Exercise A3-20 (Algorithmic) Future Values of an Annuity Use Future Value Tables or your calculator to complete the requirements below. On December 31, 2020, you sign a contract to make annual deposits of $5,200 in an investment account that earns 10%. The first deposit is made on December 31, 2020. Required: 1. Calculate what the balance in this investment account will be just after the seventh deposit has been made if interest is compounded annually. Round your answer to the...
Exercise A3-14 Future Values and Long-Term Investments Use Future Value Tables or your calculator to complete the requirement below. Portman Corporation engaged in the following transactions during 2020: On January 1, 2020, Portman deposited $12,000 in a certificate of deposit paying 6% interest compounded semiannually (3% per 6-month period). The certificate will mature on December 31, 2023. On January 1, 2020, Portman established an account with Lee County Bank. Portman will make quarterly payments of $2,500 to Lee beginning on...
Fill in the tables Use present value tables to compute the present value of $660,000 to be paid in 20 years, with an interest rate of 8 percent. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided and final answer to the nearest whole dollar amount.) Table Function: Future Value: Present Value: Use present value tables to compute the present value of 20 equal...
Use Table 12-2 to calculate the present value (in $) of the ordinary annuity. (Round your answer to the nearest cent.) Annuity Payment Payment Frequency Time Period (years) Nominal Rate (%) Interest Compounded Present Value of the Annuity $3,000 every year 20 4 annually $ Use Table 12-2 to calculate the present value (in $) of the ordinary annuity. (Round your answer to the nearest cent.) Annuity Payment Payment Frequency Time Period (years) Nominal Rate (%) Interest Compounded Present Value...
8. Problem 5.15 (Present Value of an Annuity) eBook Find the present values of these ordinary annuities. Discounting occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent. a. $200 per year for 16 years at 6%. b. $100 per year for 8 years at 3%. C. $200 per year for 8 years at 0%. d. Rework previous parts assuming they are annuities due. Present value of $200 per year for 16 years at...
1)Find the present values of these ordinary annuities. Discounting occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent. $200 per year for 16 years at 12%. $ $100 per year for 8 years at 6%. $ $1,000 per year for 8 years at 0%. $ Rework previous parts assuming they are annuities due. Present value of $200 per year for 16 years at 12%: $ Present value of $100 per year for 8...
1.Future Value: Ordinary Annuity versus Annuity Due What is the future value of a 3%, 5-year ordinary annuity that pays $250 each year? Round your answer to the nearest cent. $ If this were an annuity due, what would its future value be? Round your answer to the nearest cent. $ 2. Present and Future Value of an Uneven Cash Flow Stream An investment will pay $100 at the end of each of the next 3 years, $400 at the...
(Present value of annuity payments) The state lottery's million-dollar payout provides for $1.4 million to be paid in 20 installments of $70 comma 000 per payment. The first $70 comma 000 payment is made immediately, and the 19 remaining $70 comma 000 payments occur at the end of each of the next 19 years. If 11percent is the discount rate, what is the present value of this stream of cash flows? If 22 percent is the discount rate, what is...