Requirement Using the appropriate PV table, compute the present value of the fol

Question

Requirement Using the appropriate PV table, compute the present value of the following amounts (Click the icon to view the Present Value of $1 table (Click the icon to view the amounts received) (Click the icon to view the Present Value of an Annu (Click the icon to view the Present Value of an Ordinary Annuity table) (Use factor amounts rounded to five decimal places, XXXXXX Round intermediary computations and your final answers to the nearest cent, sx xx) a. $23,000 payable at the end of each year for 12 years with 7% interest compounded annually The present value (PV) for this scenario is

Explanation / Answer

a)Calculation of present value if discount rate is 7% Year Cashflow(in$)(a) PVF@7%(b) Present value(a*b) 1 23000 0.93458 21495.33 2 23000 0.87344 20089.09 3 23000 0.81630 18774.85 4 23000 0.76290 17546.59 5 23000 0.71299 16398.68 6 23000 0.66634 15325.87 7 23000 0.62275 14323.24 8 23000 0.58201 13386.21 9 23000 0.54393 12510.48 10 23000 0.50835 11692.03 11 23000 0.47509 10927.13 12 23000 0.44401 10212.28 Present value(in $) 182681.78 Present value is $182681.78 b) Calculation of present value: As it is semi annual so number of years will be 7*2= 14 years and discount rate will be 18/2= 9% and amount is received in the beginning of each semi annual period. Year Cashflow(in$)(a) PVF@9%(b) Present value(a*b) 0 16000 0.91743 14678.90 1 16000 0.84168 13466.88 2 16000 0.77218 12354.94 3 16000 0.70843 11334.80 4 16000 0.64993 10398.90 5 16000 0.59627 9540.28 6 16000 0.54703 8752.55 7 16000 0.50187 8029.86 8 16000 0.46043 7366.84 9 16000 0.42241 6758.57 10 16000 0.38753 6200.53 11 16000 0.35553 5688.56 12 16000 0.32618 5218.86 13 16000 0.29925 4787.94 Present value(in $) 124578.41 Present value is $124578.41 c) Calculation of present value: Year Cashflow(in$)(a) PVF@6%(b) Present value(a*b) 0 0 0.94340 0.00 1 0 0.89000 0.00 2 0 0.83962 0.00 3 0 0.79209 0.00 4 0 0.74726 0.00 5 0 0.70496 0.00 6 9000 0.66506 5985.51 7 9000 0.62741 5646.71 8 9000 0.59190 5327.09 Present value(in $) 16959.31

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