Question

Problem 5-22 (similar to) (Present value of an annuity) What is the present value of the following annuities? a. $1,600 a year for 8 years discounted back to the present at 10 percent. b. $80 a year for 5 years discounted back to the present at 7 percent. c. $260 a year for 11 years discounted back to the present at 12 percent d. $440 a year for 4 years discounted back to the present at 5 percent. a. What is the present value of $1,600 a year for 8 years discounted back to the present at 10 perce S 8535.882 (Round to the nearest cent.) b. What is the present value of $80 a year for 5 years discounted back to the present at 7 percent? $ (Round to the nearest cent) w Enter your answer in the answer box and then click Check Answer

Answer 1

Using financial calculator to calculate PV of annuity
a) I/Y=10%;N=8;PMT=-1600;CPT PV =8535.88
Present value of annuity =8535.88
b) I/Y=7%;N=5;PMT=-80;CPT PV =328.02
Present value of annuity =328.02
c)  I/Y=12%;N=11;PMT=-260;CPT PV =1543.80
Present value of annuity =1543.80
d)  I/Y=5%;N=4;PMT=-440;CPT PV =1560.22
Present value of annuity =1560.22