Question

For each of the following annuities, calculate the annual cash flow. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Cash Flow				Present Value			Years				Interest Rate
		$		$	31,800			6					11	%
					28,750			8					9
					150,500			14					14
					219,900			19					13

Answer 1

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

1.

31800=Annuity[1-(1.11)^-6]/0.11

31800=Annuity*4.230537854

Annuity=31800/4.230537854

=$7516.77(Approx).

2.

28750=Annuity[1-(1.09)^-8]/0.09

28750=Annuity*5.534819115

Annuity=28750/5.534819115

=$5194.39(Approx).

3.

150500=Annuity[1-(1.14)^-14]/0.14

150500=Annuity*6.002071503

Annuity=150500/6.002071503

=$25074.68(Approx).

4.

219900=Annuity[1-(1.13)^-19]/0.13

219900=Annuity*6.937969283

Annuity=219900/6.937969283

which is equal to

=$31695.15(Approx).