Compute the present values of the following annuities first assuming that payments are made on the last day of the period and then assuming payments are made on the first day of the period:
Payment | Years | Interest Rate (Annual) | Present Value (Payment made on last day of period) | Present Value (Payment made on first day of period) |
$ 688.09 | 8 | 14% | $ | $ |
8,068.26 | 14 | 7 | ||
20,422.93 | 24 | 5 | ||
69,812.54 | 5 | 32 |
1)
Present Value (Payment made on last day of period)
=688.09*((1-(1+14%)^(-8))/14%)
=3191.96
Present Value (Payment made on first day of period)
=(688.09*((1-(1+14%)^(-8))/14%))*(1+14%)
=3638.83
2)
Present Value (Payment made on last day of period)
=8068.26*((1-(1+7%)^(-14))/7%)
=70560.71
Present Value (Payment made on first day of period)
=(8068.26*((1-(1+7%)^(-14))/7%))*(1+7%)
=75499.96
3)
Present Value (Payment made on last day of period)
=20422.93*((1-(1+5%)^(-24))/5%)
=281808.70
Present Value (Payment made on first day of period)
=(20422.93*((1-(1+5%)^(-24))/5%))*(1+5%)
=295899.13
4)
Present Value (Payment made on last day of period)
=69812.54*((1-(1+32%)^(-5))/32%)
=163724.73
Present Value (Payment made on first day of period)
=(69812.54*((1-(1+32%)^(-5))/32%))*(1+32%)
=216116.64
the above is answer..
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