1. What is the future value on December 31, 2022, of 6 annual cash flows of $50,000 with the first cash flow being made on December 31, 2016, and interest at 9% compounded annually? Round your answer to two decimal places.
2.What will be the future value on December 31, 2020, of 5 annual $60,000 deposits starting on December 31, 2016, if the amounts earn 8% compounded annually? Round your answer to two decimal places.
3.What is the present value on January 1, 2016, of 7 equal future annual receipts of $30,000 if the first receipt is received on January 1, 2017, and the interest rate is 10% compounded annually? Round your answer to two decimal places.
4.What is the future value on December 31, 2021, of 6 annual cash flows of $50,000 with the first cash flow being made on December 31, 2016, and interest at 9% compounded annually? Round your answer to two decimal places.
Answer to Question 1:
Annual payment = $50,000
Number of payments = 6
Interest rate = 9%
Future value = $50,000*1.09^6 + $50,000*1.09^5 + $50,000*1.09^4
+ $50,000*1.09^3 + $50,000*1.09^2 + $50,000*1.09^1
Future value = $50,000 * 1.09 * (1.09^6 - 1) / 0.09
Future value = $50,000 * 8.200435
Future value = $410,021.75
Answer to Question 2:
Annual payment = $60,000
Number of payments = 5
Interest rate = 8%
Future value = $60,000*1.08^4 + $60,000*1.08^3 + $60,000*1.08^2
+ $60,000*1.08 + $60,000
Future value = $60,000 * (1.08^5 - 1) / 0.08
Future value = $60,000 * 5.866601
Future value = $351,996.06
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