Question

A 6-year annuity of twelve $11,800 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.

   

If the discount rate is 12 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

   

Value of the annuity

$

     

If the discount rate is 12 percent compounded monthly, what is the value three years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

    

Value of the annuity

$

     

If the discount rate is 12 percent compounded monthly, what is the current value of the annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

     

Value of the annuity

$

Answer 1

1)	PMT	11800
	NPER	12
	FV	0
	Discount Rate	12%	compounded monthly
	Equivalent discount Rate (semi annual compounding)	12.30%	=((((1+12%/12)^12)^(1/2))-1)*2
	PV after 9 years	$98,120.86	=-PV(12.3%/2,12,11800,0,0)
	PV after 5 years	$60,860.48	=-PV(12%/12,48,,98120.86,)
2)	PV 3 yrs from now	$47,931.65	=-PV(12%/12,24,,60860.48,)
3)	Current value of annuity	$33,500.63	=-PV(12%/12,36,,47931.65,)