A 5-year annuity of ten $8,000 semiannual payments will begin 9 years from now,

Question

A 5-year annuity of ten $8,000 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.

If the discount rate is 8 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If the discount rate is 8 percent compounded monthly, what is the value three years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

      If the discount rate is 8 percent compounded monthly, what is the current value of the annuity?

If the discount rate is 8 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

k = .08/8 = .01

(1.01)^6 - 1 = .06152 = k

PV5 = 8000((1 - 1/1.06152^5.5)/0.6152) = 27 298.08
PV3 = 8000((1 - 1/1.06152^3.5)/0.6152) = 18 391.04
PV = 8000((1 - 1/1.06152^0.5)/0.6152) = 286.83

Text answer:
t = 5, 27 194.83
t = 3, 21 417.72
t = 0, 14 969.38

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