Question

Exercise B-10 Present values of annuities LO P3

C&H Ski Club recently borrowed money and agreed to pay it back with a series of six annual payments of $10,000 each. C&H subsequently borrows more money and agrees to pay it back with a series of four annual payments of $8,000 each. The annual interest rate for both loans is 6%. Find the present value of these two separate annuities. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar. Round "Table Factor" to 4 decimal places.)

First Annuity
	Number of Periods	Interest Rate	Single Future Payment	x	Table Factor	=	Amount Borrowed
First payment	1	6%	$10,000	x		=
Second payment	2	6%	10,000	x		=
Third payment	3	6%	10,000	x		=
Fourth payment	4	6%	10,000	x		=
Fifth payment	5	6%	10,000	x		=
Sixth payment	6	6%	10,000	x		=
Second Annuity
	Number of Periods	Interest Rate	Single Future Payment	x	Table Factor	=	Amount Borrowed
First payment	1	6%	$8,000	x		=
Second payment	2	6%	8,000	x		=
Third payment	3	6%	8,000	x		=
Fourth payment	4	6%	8,000	x		=

Answer 1

First Annuity
	Number of Periods	Interest Rate	Single Future Payment	x	Table Factor	=	Amount Borrowed
First payment	1	6%	10,000	x	0.9434	=	9434
Second payment	2	6%	10,000	x	0.8900	=	8900
Third payment	3	6%	10,000	x	0.8396	=	8396
Fourth payment	4	6%	10,000	x	0.7921	=	7921
Fifth payment	5	6%	10,000	x	0.7473	=	7473
Sixth payment	6	6%	10,000	x	0.7050	=	7050
							49174
Second Annuity
	Number of Periods	Interest Rate	Single Future Payment	x	Table Factor	=	Amount Borrowed
First payment	1	6%	8,000	x	0.9434	=	7547
Second payment	2	6%	8,000	x	0.8900	=	7120
Third payment	3	6%	8,000	x	0.8396	=	6717
Fourth payment	4	6%	8,000	x	0.7921	=	6337
							27721