E connect FINANCE TVM-DCF value 100 points Suppose you are going to receive $13,

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E connect FINANCE TVM-DCF value 100 points Suppose you are going to receive $13,400 per year for five years. The appropriate interest rate is 8.3 percent. a-1 What is the present value of the payments if they are in the form of an ordinary annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.) Present value a-2 What is the present value if the payments are an annuity due? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value b-1 Suppose you plan to invest the payments for five years. what is the future value if the payments are an ordinary annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value b-2 Suppose you plan to invest the payments for five years. What is the future value if the payments are an annuity due? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g, 32.16.) Future vaue Hints References eBook & Resources O Type here to search

Explanation / Answer

a -1)

Present value of annuity = Annuity * [ 1 - 1 / ( 1 + r)n] / r

Present value of annuity = 13,400 * [ 1 - 1 / ( 1 + 0.083)5] / 0.083

Present value of annuity = 13,400 * 3.961338

Present value of annuity = $53,081.93

a 2)

Present value of annuity due = ( 1 + r) * Annuity * [ 1 - 1 / ( 1 + r)n] / r

Present value of annuity due = ( 1 + 0.083) * 13,400 * [ 1 - 1 / ( 1 + 0.083)5] / 0.083

Present value of annuity due = ( 1.083) * 13,400 * 3.961338

Present value of annuity due = $57,487.73

b 1)

Future value of annuity = Annuity * [ ( 1 + r)n - 1] / r

Future value of annuity = 13,400 * [ ( 1 + 0.083)5 - 1] / 0.083

Future value of annuity = 13,400 * 5.901796

Future value of annuity = $79,084.07

b 2)

Future value of annuity due = ( 1 + r) * Annuity * [ ( 1 + r)n - 1] / r

Future value of annuity due = ( 1 + 0.083) * 13,400 * [ ( 1 + 0.083)5 - 1] / 0.083

Future value of annuity due = ( 1.083) * 13,400 * 5.901796

Future value of annuity due = $85,648.05

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