You are set to receive an annual payment of $12,700 per year for the next 14...

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Answer 1

Answer #1

Present value of ordinary annuity = Annuity * [1 - 1 / (1 + r)^n] / r

Present value of ordinary annuity = 12,700 * [1 - 1 / (1 + 0.076)^14] / 0.076

Present value of ordinary annuity = 12,700 * [1 - 0.358615] / 0.076

Present value of ordinary annuity = 12,700 * 8.439279

Present value of ordinary annuity = $107,178.8437

Present value of annuity due = (1 + r) * Annuity * [1 - 1 / (1 + r)^n] / r

Present value of annuity due = (1 + 0.076) * 12,700 * [1 - 1 / (1 + 0.076)^14] / 0.076

Present value of annuity due = 1.076 * 12,700 * [1 - 0.358615] / 0.076

Present value of annuity due = 1.076 * 12,700 * 8.439279

Present value of annuity due = $115,324.4354

How much more = 115,324.4354 - 107,178.8437

How much more = $8,145.59

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Answer 2

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