Question

Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods. Click here to view factor tables $50,440 receivable at the end of each period for 8 periods compounded at 11%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $ Click here to view factor tables $50,440 payments to be made at the end of each period for 18 periods at 10%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $ Click here to view factor tables $50,440 payable at the end of the seventh, eighth, ninth, and tenth periods at 11%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $

Answer 1

1.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=50440[1-(1.11)^-8]/0.11

=$50440*5.14612

=$259,570(Approx).

2.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=$50440[1-(1.1)^-18]/0.1

=$50440*8.20141

=$413,679(Approx).

3.Present value=Cash flows*Present value of discounting factor(rate%,time period)

=50440/1.11^7+50440/1.11^8+50440/1.11^9+50440/1.11^10

=50440[1/1.11^7+1/1.11^8+1/1.11^9+1/1.11^10]

=(50440*1.65869)

=$83664(Approx).