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.)

If PV is 31, 500, Years are 6, and Interest Rate is 8%, what is Cash Flow?

If PV is 28,300, Years are 8, and Interest Rate is 6%, what is Cash Flow?

If PV is 146,000, Years are 11, and Interest Rate is 11%, what is Cash Flow?

If PV is 214,500, Years are 18, and Interest Rate is 10%, what is Cash Flow?

Please show all answers using steps on a financial calculator so I may learn, thank you!

Answer 1

We will be using a BA 2 plus financial calculator to calculate the cash flows-

Putting the following inputs in the calculator-

1)

N(years) = 6

PV(present value) = 31,500

I/Y (Interest rate) = 8%

CMPT PMT

Cash flow = 6813.9347

2)

N(years) = 8

PV(present value) = 28,300

I/Y (Interest rate) = 6%

CMPT PMT

Cash flow = 4557.3172

3)

N(years) = 11

PV(present value) = 146,000

I/Y (Interest rate) = 11%

CMPT PMT

Cash flow = 23,523.667

4)

N(years) = 18

PV(present value) = 214,500

I/Y (Interest rate) = 10%

CMPT PMT

Cash flow = 26,154.0327

Please NOTE: When you will perform the functions in the financial calculator and compute the cash flows, all the cash flows will come in a negative sign, please ignore the sign.