i.Find the present value of the following ordinary annuities. $400 per year for

Question

i.Find the present value of the following ordinary annuities.

$400 per year for 10 years at 10%

$200 per year for 5 years at 5%

$400 per year for 5 years at 0%

Now rework parts a, b, and c assuming that payments are made at the beginning of the year.

ii.Find the amount to which $500 will grow under each of the following conditions.

12% compounded annually for 5 years

12% compounded semiannually for 5 years

12% compounded quarterly for 5 years

12% compounded monthly for 5 years

iii.Find the present value of $500 due in the future under each of the following conditions.

12% nominal rate, semiannual compounding, discounted back 5 years

12% nominal rate, quarterly compounding, discounted back 5 years

12% nominal rate, monthly compounding, discounted back 1 years

Explanation / Answer

=PV(10%,10,-400,0,0)=2457.83 =PV(5%,5,-200,0,0)=865.90 =PV(0%,5,-400,0,0)=2000 =PV(10%,10,-400,0,1)=2703.61 =PV(5%,5,-200,0,1)=909.19 =PV(0%,5,-400,0,1)=2000 =FV(12%,5,0,-500)=881.17 =FV(12%/2,5*2,0,-500)=895.42 =FV(12%/4,5*4,0,-500)=903.06 =FV(12%/12,5*12,0,-500)=908.35 =PV(12%/2,5*2,0,500)=279.20 =PV(12%/4,5*4,0,500)=276.84 =PV(12%/12,1*12,0,500)=443.72

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