Question

chancellor ltd. sells an asset with a $1.6 million fair value to sophie inc. sophie agrees to make six equal payments, each to be paid one year apart, commencing on the date of sale. the payments include principal and 6% annual interest. compute the annual payments.((fv of $1, pv of $1, fva of $1, pva of $1, fvad of $1 and pvad of $1) (use appropriate factor(s) from the tables provided.)

Answer 1

Amount of annual Payment	present value*PVAF of annuity due at 6% for 6 years	1600000/5.21233	306964.45
present value			1600000
Present value annuity factor of annuity due	PVAF at 6% for 6 years*(1+r)	4.9173*(1.06)	5.212338
PVAF at 6% for 6 years	1-(1+r)^-n/r =1-(1.06)^-20/6%	.295039/6%	4.917316667