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present value

Calculate the present value of the following amounts: 1. $5,000 at the end of five years at 6% 2. $5,000 a year at the end of
Present Value of Annuity of $1 Periods 4% 5% Present Value of Ordinary Annuity of $1 6% 10% 12% 14% 16% 0.962 0.952 0.9430.93
Present Value of $1 Present Value of $1 7% 8% Periods 4% 5% 6% 10% 12% 14% 16% 1. COM 7 9 0.962 0.952 0.943 0.935 0.926 0.909
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Homework Answers

Answer #1

Answer to Part 1

Amount = $5,000
Rate (r ) = 6%
Time (n ) = 5 years

Present Value = Amount * PV of $1 (i%, n)
Present Value = $5,000 * PV of $1 (6%, 5)
Present Value = $5,000 * 0.747
Present Value = $3,735

Answer to Part 2

Annual Payment = $5,000
Rate (r ) = 6%
Time (n ) = 5 years

Present Value of Annuity = Annual Payment * PVA of $1 (i%, n)
Present Value of Annuity = $5,000 * PVA of $1 (6%, 5)
Present Value of Annuity = $5,000 * 4.212
Present Value of Annuity = $21,060

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