Question

please show me the steps of these two questions

There are two types of annuity payments. An ordinary annuity has the test payment starting at the end of the next period This is associated with payments such as cow or house payments An Annuity Due has payments starting immediately This would be similar to a payment for leasing and lean pormenor piece of equipment Below is an example of an annuity due or an ordinary annuity Decide and compute the correct value What is the present value of six payments of $113 made on an apartment Assume the first of the six payments occurs immediately before you can move in and the appropriate discount rate is 10% Selected Answer Correct Answer: 554136 51. 10.01 estions Below is an example of an uneven cash flow problem in an uneven cash flow problem the cash flows occur over time, but they are not equals they are not necessary period i n annuty The type of problems can be solved by discounting be compounding each w as appropriate and summing the result together Spreadsheets and certain unctions in a color can also be used to the calculation it is expected that you can compute simple exples of uneven cash flow problems using basic TVM functions A busness investment is the following expected cash flows Yeat Cash Flow 1 $10.000 $15.435 The discount rate is 7 percent. What is the investment's presenta ?

Answer 1

Present value of annuity due = Immediate Cash flows + cash flow*Present value annuity factor

= 113 + 113*PVAF(10%, 5 years)

= 113 + 113*3.791

= $541.383 approx.

5.Present value of investment = 10,000/(1.07) + 15,435/(1.07)^2

= $22,827.32