Question

Delete T P Y т U O Enter G H J к L Problem Set 2 1, a, For each of the following annuities, calculate the annual cash flow. Cash Flow Present Value Years $32,400 6 $29,650 8 $159,500 20 $230,700 22 Interest Rate 10% 8% 13% 12% b, For each of the following annuities, calculate the present value. Cash Flow Present Value Years $2,250 $1,355 $12.205 $31,400 7 9 14 30 Interest Rate 8% 7% 9% 11% Interest Rate c. For each of the following annuities, calculate the annuity payment. Cash Flow Future Value Years $24,850 8 $1,030,000 43 $856,000 29 $139,000 14 5% 7% 8% 4% Interest Rate d. For each of the following annuities, calculate the future value. Cash Flow Future Value Years $1,580 $6,980 $3,780 $8,490 10 39 9 34 5% 6% 3% 7%

Answer 1

Amounts are in $

The answer is attached as a picture

य 2 Years latrate P.V.l.f. A Present value Cashflow (²W 6 10% 4.35526 32,400 7,439 8 87. 5.746639 29,650 5, 160 20 13% 7.0247516 Isa, 500 22, 705 22 12% 7.644646 230,200 30,178 6 Years Intrate P.v.lif.A Cashflow Presest valic (x2) 7 87 5,20637 2,250 bao 11,714 9 1% 6.515232 1,355 8,828 14 7.786 1504 12,205 95,030 30 11. 8,6937926 31, you 273,98 ② Years Intitate F.v.I.F.A future the conflow (2/2) 5% 9.5491089 24,850 2,602 43 77 247. 276496 1,030,000 4,157 08 8 % 103.965936 856,000 8,233 1 18.291911 139,000 7,599 Friday o ② years Indosate F.v.).S.A Cashflow future volue Ox2) 52 12.5178925 1,580 19,873 39 67 145.058458 6,980 1,012,508 9 의 16.159106 3,780 38, hol 34 TA 128.2587 648 8,490 1,088,917 3% Scanned with CamScanner

PVIFA = Present Value Interest Factor Annuity

FVIFA = Future Value Interest Factor Annuity

For example take 1st case from (a)

Interest rate is 10% and period is 6 years

PVIFA(10%,6 years) = 4.35526

This value we got from calculator, the same is also available in online present value factor tables.

Cashflow = Present Value/PVIFA = 32,400/4.35526 = 7,439

All the other questions are decided in similar fashion

Note :

Both the present value and future value annuity factors are taken as ordinary annuity (year end annuity) and not annuity due (year beginning annuity)