Question

value: 10.00 points Payments of $1500 will be made at the end of every quarter for 13.5 years. a. Using a nominal rate of 7.5% compounded semiannually, calculate the annuity's present value. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Present value $ b. Using a nominal rate of 7.5% compounded semiannually, calculate the annuity's future value (Do not round intermediate calculations and round your final answer to 2 decimal places.) Future value $

Answer 1

The number of quarterly payments, n = 13.5 * 4 = 54

Effective quarterly rate, r = (1 + 0.075/2)^(1/2) - 1

r = 0.01857743937

a.

$PV = \frac{PMT}{ r } * \left [ 1 - \frac{1}{(1+ r )^{ n }} \right ]$

1. 500 0.01857743937 * (1+0.0185774393714 |

PV = 80, 743.0975886964* 0.6298982363

PV = $50,859.9347645186

PV = $50,859.93

b.

PMT FV = =*[(1 + r)" - 1

FV = - 1,500 0.01857743937 *[(1 +0.01 209* [(1 + 0.01857743937)54 - 1

FV = 80, 743.0975886964 * 1.7019595638

FV = 137, 421.487151919

FV = $137,421.49

Can you please upvote? Thank You :-)