Calculate the furture value of the folowing annurty streams recelved each year f
ID: 2814643 • Letter: C
Question
Calculate the furture value of the folowing annurty streams recelved each year for 4 years on the last day of each year if your investments pay 6 percent compounded annually b. $6, 000 recetved each quarter for 4 years on the last day of each quarter If your Investments pay 6 percent compounded c. $6,000 recelved each year for 4 years on the first day of each year if your Investments pay 6 percent compounded annually first day of each quarter if your investments pay 6 percent compounded quarterty For all requirements, do not round intermedilate calculations. Round your answers to 2 decimal places (e.g, 3216) a. Future value b. Future value a. Future value d. Future value Next >Explanation / Answer
1.
FV = P x FVIFA (i, n)
P = periodic cash flow
i = Rate per period
n = No. of periods
a.
i = 6 %, n = 4 periods
FV = $ 6,000 x FVIFA (6 %, 4)
$ 6,000 x 4.3746 = $ 26,247.60
b.
i = 6 % p.a. or 6 % /4 = 1.5 % p. q., n = 4x4 = 16 periods
FV = $ 6,000 x FVIFA (1.5 %, 16)
$ 6,000 x 17.9324 = $ 107,594.40
c.
FV = (1+r) x FV of ordinary annuity
= 1.06 x $ 26,247.60 = $ 27,822.46
d.
FV = (1+r) x FV of ordinary annuity
= 1.015 x $ 107,594.40 = $ 109,208.32
Answer:
a.
Future value
$ 26,247.60
b.
Future value
$ 107,594.40
c.
Future value
$ 27,822.46
d.
Future value
$ 109,208.32
2.
Formula for Equal monthly payment (EMI) is:
EMI = P × r × (1 + r) n/ {(1 + r)n - 1 }
Where,
P = Principal = $ 160,000
R = rate of interest = 7 % or 0.07/12 p.a. or 0.005833333 p.m.
n = No. of periods = 15 years x 12 months = 180 periods
Equal monthly payment
= $ 160,000 x 0.005833333 x (1 + 0.005833333)180 / {(1 + 0.005833333) 180 -1}
= $ 160,000 x 0.005833333 x (1.005833333)180 / {(1.005833333) 180 -1}
= $ 160,000 x 0.005833333 x 2.848946731/ (2.848946731-1)
= $ 160,000 x 0.005833333 x 2.848946731/1.848946731
= $ 160,000 x 0.005833333 x 1.540848464
= $ 1,438.13
Answer:
Monthly payments are $ 1,438.13.
a.
Future value
$ 26,247.60
b.
Future value
$ 107,594.40
c.
Future value
$ 27,822.46
d.
Future value
$ 109,208.32
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