Question

For each of the following annuities, calculate the annual cash flow. (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g.,32.16).)

Cash Flow				Future Value			Interest Rate				Years
	$			$	25,250			9	%				8
	$				1,070,000			11					37
	$				904,000			12					23
	$				143,000			8					12

Answer 1

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

1.

25,250=Annuity[(1.09)^8-1]/0.09

25,250=Annuity*11.0284738

Annuity=25,250/11.0284738

=$2289.53(Approx)

2.

1,070,000=Annuity[(1.11)^37-1]/0.11

1,070,000=Annuity*422.98249

Annuity=1,070,000/422.98249

=$2529.66(Approx)

3.

904,000=Annuity[(1.12)^23-1]/0.12

904,000=Annuity*104.602894

Annuity=904,000/104.602894

=$8642.21(Approx)

4.

143,000=Annuity[(1.08)^12-1]/0.08

143,000=Annuity*18.9771265

Annuity=143,000/18.9771265

=$7535.39(Approx)