Suppose you are going to receive $12,800 per year for six years. The appropriate
ID: 2634696 • Letter: S
Question
Suppose you are going to receive $12,800 per year for six years. The appropriate interest rate is 7.7 percent.
A- What is the present value of the payments if they are in the form of an ordinary annuity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
B.
What is the present value if the payments are an annuity due? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
C. Suppose you plan to invest the payments for six years. What is the future value if the payments are an ordinary annuity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
D.
Suppose you plan to invest the payments for six years. What is the future value if the payments are an annuity due? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Suppose you are going to receive $12,800 per year for six years. The appropriate interest rate is 7.7 percent.
A- What is the present value of the payments if they are in the form of an ordinary annuity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
Year Amount PV formulae in case of Ordinary Annuity PV in case of Ordinary Annuity PV formulae in case of Annuity Due PV in case of Annuity Due FV of Annuity Invested formulae FV of Annuity Invested FV of Annuity Due Invested formulae FV of Annuity Due Invested 1 12800 12800/(1.077^1) 11884.87 12800 12800 12800*(1.077^5) 18547.63 12800*(1.077^6) 19975.80 2 12800 12800/(1.077^2) 11035.16 12800/(1.077^1) 11884.87 12800*(1.077^4) 17221.57 12800*(1.077^5) 18547.63 3 12800 12800/(1.077^3) 10246.20 12800/(1.077^2) 11035.16 12800*(1.077^3) 15990.32 12800*(1.077^4) 17221.57 4 12800 12800/(1.077^4) 9513.65 12800/(1.077^3) 10246.20 12800*(1.077^2) 14847.09 12800*(1.077^3) 15990.32 5 12800 12800/(1.077^5) 8833.47 12800/(1.077^4) 9513.65 12800*(1.077^1) 13785.60 12800*(1.077^2) 14847.09 6 12800 12800/(1.077^6) 8201.92 12800/(1.077^5) 8833.47 12800*(1.077^0) 12800 12800*(1.077^1) 13785.60 Total 59715.27 64313.35 93192.21274 100368.01
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