What is the present value of an annuity of $120 received at the end of each year

Question

What is the present value of an annuity of $120 received at the end of each year for 11 years Assume a discount rate of 7%. The first payment will be received one year from today (round to nearest $1). $250 $400 $570 $900 Bill plans to fund his individual retirement account (IRA) with the maximum ontribution of $2,000 at the end of each year for the next 20 years. If Bill can earn 12 percent on his contributions, how much will he have at the end of the twentieth year $19,292 $14,938 $40,000 $144,104 The present value of an ordinary annuity of $2,350 each year for eight years, assuming an opportunity cost of 11 percent, is______. $ 1,020 $27,869 $18,800 $12,093

Explanation / Answer

10. ANSWER: D- $ 900 PV of an annuity= PV=(Annuity amt.*((1-(1+r)^-n)/r)) r= Discount rate ; n=no.of Years. PV=(120*((1-(1+0.07)^-11)/0.07)) 899.8409 $900 11. Future value of an annuity of $ 2000 At the end of each Year for 20 years. @ r=12% FV= Annuity Amt((1+i)^n-1)/i) FV= 2000*((1+0.12)^20-1)/0.12) 144104.9 Answer: D- $ 144104 12. ANSWER: D- $ 12093 PV of an annuity= PV=(Annuity amt.*((1-(1+r)^-n)/r)) r= Discount rate ;(0.11) n=no.of Years.(8) PV=(2350*((1-(1+0.11)^-8)/0.11)) 12093.39 $12093

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