Question

How much would you have to invest today to receive the following? Use Appendix B or Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a. $13,000 in 8 years at 12 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

b. $16,500 in 15 years at 9 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

c. $6,700 each year for 17 years at 15 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

d. $44,000 each year or 40 years at 9 percent.

Answer 1

1.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=$13000/1.12^8

=$5250.48

2.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=$165001.09^15

=$4529.88

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

=$6700[1-(1.15)^-17]/0.15

=$6700*6.047160755

=$40515.98

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

=$44000[1-(1.09)^-40]/0.09

=$44000*10.7573602

which is equal to

=$473,323.85(Approx).