Question

2 x Cut Calibri = = 23 Wrap Text General - Ib Copy - 11-AA aA. BIU. - Merge & Center - $ % 9 Format Painter Clipboard Font Alignment Number Name Answers rounded to 2 decimals glven Info part 1 future value= periodic interest rate number of compounding periods = 1,000.00 0.035 32.00 what is the present value (single payment)? part 2 periodic payment periodic interest rate= number of compounding periods 32.00 0.035 32.00 What is the present value of this annuity? 5 part 3 add part 1 and part 2 7 part 4 future value = periodic interest rate= number of compounding periods = 1,000.00 0.06 32.00 what is the present value (single payment)? 2 parts periodic payment periodic interest rate= number of compounding periods 40.00 0.06 32.00 What is the present value of this annuity? 27 part 6 add part 4 and parts Sheet2 Enter Calculate Type here to search

Answer 1

1). PV = FV / [1 + r]ⁿ = $1,000 / [1 + 0.035]³² = $1,000 / 3.0067 = $332.59

2). PV of Annuity = Annuity * [{1 - (1 + r)^-n} / r]

= $32 * [{1 - (1 + 0.035)^-32} / 0.035]

= $32 * [0.6674 / 0.035]

= $32 * 19.0689 = $610.20

3). Part 1 + Part 2 = $332.59 + $610.20 = $942.79

4). PV = FV / [1 + r]ⁿ = $1,000 / [1 + 0.06]³² = $1,000 / 6.4534 = $154.96

5). PV of Annuity = Annuity * [{1 - (1 + r)^-n} / r]

= $40 * [{1 - (1 + 0.06)^-32} / 0.06]

= $40 * [0.8450 / 0.06]

= $40 * 14.0840 = $563.36

6). Part 4 + Part 5 = $154.96 + $563.36 = $718.32