Question

Exercise 5-13 (Algo) Solving for unknowns; annultles (LO5-9) For each of the following situations involving annuities, solve for the unknown. Assume that interest is compounded annually and that all annuity amounts are received at the end of each period. (i= interest rate, and n=number of years) (FV of $1. PV of $1. FVA of $1, PVA of $i. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount.) 8% 5 1 2 Annuity Amount $ 5,200 70,000 50,000 101,616 4 11% 212,615 377,440 660,000 170,000 3 11 4 10% 4 5

Answer 1

	Present value	Annuity amount	i=	n=
1	20762	5200	8%	5
2	212615	70000	12%	4
3	377440	50000	11%	17
4	660000	101616	10%	11
5	170000	53630	10%	4

Workings:

*Using PVAF table for all

1. Present value = 5200 * 3.99271 = 20762

2. Annuity factor = 216215 / 70000 = 3.03735 , looking up the table, i = 12%

3. Annuity factor = 377440 / 50000 = 7.5488 , looking up the table, n = 17

4. Annuity factor = 170000 / 53630 = 6.4950 , looking up the table, n = 10%

5. Annuity = 170000 /3.16987 = 53630