Question

Suppose you are going to receive $11,200 per year for five years. The appropriate interest rate is 11 percent. a. What is the present value of the payments if they are in the form of an ordinary annuity? (Do not round intermediate calc Present value What is the present value of the payments if the payments are an annuity due? (Do not round intermediate calculations ar Present value $ b. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? Future value What is the future value if the payments are an annuity due? (Do not round intermediate calculations and round your ans Future value $

Answer 1

ДА В C D Present Value - Ordinary Annuity 2 Year Cash Receipts PV @ 11% Present Value 3 1 $ 11,200.00 0.900900901 $ 10,090.09 4 2 $ 11,200.00 0.811622433 $ 9,090.17 5 3 $ 11,200.00 0.731191381 $ 8,189.34 6 4 $ 11,200.00 0.658730974 $ 7,377.79 7 5 $ 11,200.00 0.593451328 $ 6,646.65 8 Present Value - Ordinary Annuity $ 41,394.05 9 10 Present Value - Annuity Due 11 Year Cash Receipts PV @ 11% Present Value 12 0 $ 11,200.00 1 $ 11,200.00 13 1 $ 11,200.00 0.900900901 $ 10,090.09 14 2 $ 11,200.00 0.811622433) $ 9,090.17 15 3 $ 11,200.00 0.731191381 $ 8,189.34 16 4 $ 11,200.00 0.658730974 $ 7,377.79 17 Present Value - Annuity Due $ 45,947.39 19

А в 1 Present Value - Ordinary Annuity 2 Year Cash Receipts PV @ 11% Present Value 3 1 11200 1=1/1.11 =B3*C3 4 2 11200 =C3/1.11 =B4*C4 5 3 11200 =C4/1.11 =B5*C5 6 4 11200 =C5/1.11 =B6*C6 75 11200 =C6/1.11 =B7*C7 8 Present Value - Ordinary Annuity 9 10 Present Value - Annuity Due 11 Year Cash Receipts PV @ 11% Present Value 120 11200 1 =B12*C12 13 1 11200 =C12/1.11 =B13*C13 14 2 11200 =C13/1.11 =B14*C14 15 3 11200 =C14/1.11 =B15*C15 16 4 |11200 |=C15/1.11 =B16*C16 17 Present Value - Annuity Due =SUM(D12:016) 11200

Future Value - Ordinary Annuity 20 Year Cash Receipts FV @ 11% Future Value 21 1 $ 11,200.00 1.51807041 $ 17,002.39 22 2 $ 11,200.00 1.367631 $ 15,317.47 23 3 $ 11,200.00 1.2321 $ 13,799.52 24 4 $ 11,200.00 1.11 $ 12,432.00 25 5 $ 11,200.00 1 $ 11,200.00 26 Future Value - Ordinary Annuity | $ 69,751.38 27 Future Value - Annuity Due 29 Year Cash Receipts FV @ 11% Future Value 30 0 $ 11,200.00 1.685058155 $ 18,872.65 31 1 $ 11,200.00 1.51807041 $ 17,002.39 32 2 $ 11,200.00 1.367631 $ 15,317.47 33 3 $ 11,200.00 1.2321 $ 13,799.52 34 4 $ 11,200.00 1.11 $ 12,432.00 35 Future Value - Annuity Due $ 77,424.03 28

19 | AB D Future Value - Ordinary Annuity 20 Year Cash Receipts FV @ 11% Future Value 211 11200 =(1+0.11)^(5-A21) =B21*C21 22 2 11200 =C21/1.11 =B22*C22 23 3 11200 =C22/1.11 =B23*C23 24 4 11200 =C23/1.11 =B24*C24 25 5 11200 =C24/1.11 =B25*C25 26 Future Value - Ordinary Annuity =SUM(D21:D25) 27 28 Future Value - Annuity Due 29 Year Cash Receipts FV @ 11% Future Value 300 11200 =(1+0.11)^(5-A30) =B30*C30 31 1 11200 =B31*C31 32 2 11200 =C31/1.11 =B32*C32 33 3 11200 =C32/1.11 =B33*C33 34 4 11200 1=C33/1.11 =B34*C34 35 Future Value - Annuity Due =SUM(D30:D34) 36 =C30/1.11