A 6-year annuity of twelve $8,600 semiannual payments will begin 9 years from no

Question

A 6-year annuity of twelve $8,600 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.

If the discount rate is 15 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

If the discount rate is 15 percent compounded monthly, what is the value three years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

If the discount rate is 15 percent compounded monthly, what is the current value of the annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

A 6-year annuity of twelve $8,600 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.

Explanation / Answer

1)A 6-year annuity of twelve $8,600 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 15 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Monthly Rate = 15%/12 1.25% Effective Semiannual rate = EAR = (1+ Rate)^6 - 1 7.74% PVA @ year 9 PMT $8,600 Nper 12 Present Value of Annuity at end of 9th year= PV(7.74%,12,-8600) $65,698.27 This is the value one period (six months) before the first payment, so it is the value at year 9. So, the value at the various times the questions asked for uses this value 9 years from now. Nper = (9 years - 5 years) x 2 8 value of this annuity five years from now =PV(7.74%,8,0,-$65,698.27) $36,190.32 If the discount rate is 15 percent compounded monthly, what is the value three years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Nper = (9 years - 3 years) x 2 12 value of this annuity three years from now =PV(7.74%,12,0,-$65,698.27) $26,860.35 If the discount rate is 15 percent compounded monthly, what is the current value of the annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Nper = (9 years x 2) 18 value of this annuity now =PV(7.74%,18,0,-$65,698.27) $17,174.75

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