Find the present value of 10-year ordinary annuity of $5,000 per year plus extra $2,000 at the end of 10th year. Assume 5% interest rate. Assume annual compounding. Include up to 2 decimals.
| A. |
$38,896.5 |
|
| B. |
$33,547.9 |
|
| C. |
$55,578.6 |
|
| D. |
$35,547.8 |
|
| E. |
$39,836.5 |
| Year | Cash flow | PVIF@5% | Present value |
| 0 | $ - | 1.00000 | $0.0 |
| 1 | $ 5,000 | 0.95238 | $4,761.9 |
| 2 | $ 5,000 | 0.90703 | $4,535.1 |
| 3 | $ 5,000 | 0.86384 | $4,319.2 |
| 4 | $ 5,000 | 0.82270 | $4,113.5 |
| 5 | $ 5,000 | 0.78353 | $3,917.6 |
| 6 | $ 5,000 | 0.74622 | $3,731.1 |
| 7 | $ 5,000 | 0.71068 | $3,553.4 |
| 8 | $ 5,000 | 0.67684 | $3,384.2 |
| 9 | $ 5,000 | 0.64461 | $3,223.0 |
| 10 | $ 7,000 | 0.61391 | $4,297.4 |
| Present value | $39,836.5 | ||
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