Compute the answers to the questions below with the given interest rate. Interest rate (annual) 6%...
Compute the answers to the questions below with the given interest rate.
| Interest rate (annual) | 6% | ||||
| Year | Cash Flow | ||||
| 1 | $ 4,257 | ||||
| 2 | $ 4,257 | ||||
| 3 | $ 4,257 | ||||
| 4 | $ 4,257 | ||||
| 5 | $ 4,257 | ||||
| 6 | $ 4,257 | ||||
| Annuity Due Present Value | |||||
| Annuity Due Future Value | |||||
| Ordinary Annuity Present Value | |||||
| Ordinary Annuity Future Value | |||||
Homework Answers
Solution:
Annuity due present value = $4,257 * Cumulative PV factor at 6% for 6 periods of annuity due
= $4,257 * 5.21236 = $22,189
Annuity due future value = $4,257 * Cumulative FV factor at 6% for 6 periods of annuity due
= $4,257 * 7.39384 = $31,476
Ordinary annuity present value = $4,257 * Cumulative PV factor at 6% for 6 periods
= $4,257 * 4.91732 = $20,933
Ordinary annuity future value = $4,257 * cumulative FV factor at 6% for 6 periods
= $4,257 * 6.97532 = $29,694
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