4-13, Find the present value of the following ordinary annuities (Note: if your

Question

4-13, Find the present value of the following ordinary annuities (Note: if your using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. that you can leave values in the TVM register, switch to begin mode, press FV, and find the FV of the annuity due.) a. $400 per year for 10 years at 10% b. $200 per year for 5 years at 5% c. $400 per year for 5 years at 0% d. Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.

Explanation / Answer

A) Present value =PVAF@10%,10 *Amount

                           = 6.14457 * 400

                           = $ 2457.83

b) Present value =PVAF@5%,5 *Amount

                        = 4.32948* 200

                      = $ 865.90

c)Present value =$ 400

Part 2)annuity due:We will use due factors

a)Present value = 6.75902 * 400

                        = $ 2703.61

b)Present value = 4.54595 * 200

                      = $ 909.19

c)Present value = $ 400

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