Calculate the present value of the following annuity streams: (Please show work)

Question

Calculate the present value of the following annuity streams: (Please show work)

a. $5,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually.

b. $5,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent compounded quarterly.

c. $5,000 received each year for 5 years on the first day of each year if your investments pay 6 percent compounded annually.

d. $5,000 received each quarter for 5 years on the first day of each quarter if your investments pay 6 percent compounded quarterly.

Explanation / Answer

(a)

answer = 21061.82


(c) Answer is 22325.52

Year 1 Year 2 Year 3 Year 4 Year 5
5000 5000 5000 5000 5000 Total 1.06 1.1236 1.191016 1.262477 1.338226
4716.981 4449.982 4198.096 3960.468 3736.291 21061.82

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