Question

# Using the appropriate present value table and assuming a 12% annual interest rate, determine the present...

Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2018, of a five-period annual annuity of \$4,400 under each of the following situations: (FV of \$1, PV of \$1, FVA of \$1, PVA of \$1, FVAD of \$1 and PVAD of \$1) (Use appropriate factor(s) from the tables provided.)

1.The first payment is received on December 31, 2019, and interest is compounded annually.
2.The first payment is received on December 31, 2018, and interest is compounded annually.
3.The first payment is received on December 31, 2019, and interest is compounded quarterly.

 table or calculator function ? Payment: ? n= ? i= ? PV-12/31/18

 Payment: 4400 n= 5 i= 12% PV-12/31/18 \$15861.02

1. PVA = \$4400 * 3.60478 = \$15861.02

* Present value of an ordinary annuity of \$1, n =5, i = 12% ( From PVA of \$1)

 Payment: 4400 n= 5 i= 12 PV-12/31/18

2. PVA = \$4400 * 4.03735 = \$17764.34

* Present value of an Annuity due of \$1, n =5, i = 12% ( From PVA of \$1)

3.

 Payment * PV of \$1 = 3% = PV n First payment \$4400 * 0.88849 = 3909.35 4 Second payment \$4400 * 0.78941 = 3473.40 8 Third Payment \$4400 * 0.70138 = 3086.07 12 Fourth payment \$4400 * 0.62317 = 2741.95 16 Fifth payment \$4400 * 0.55368 = 2436.19 20 Total 15646.97

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