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
		$		$	31,700			6					10	%
					28,600			8					8
					149,000			13					13
					218,100			17					12

Answer 1

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

1.

31700=Annuity[1-(1.1)^-6]/0.1

31700=Annuity*4.355260699

Annuity=$31700/4.355260699

=$7278.55(Approx).

2.

28600=Annuity[1-(1.08)^-8]/0.08

28600=Annuity*5.746638944

Annuity=$28600/5.746638944

=$4976.82(Approx).

3.

149000=Annuity[1-(1.13)^-13]/0.13

149000=Annuity*6.121811519

Annuity=$149000/6.121811519

=$24339.20(Approx).'

4.

218100=Annuity[1-(1.12)^-17]/0.12

218100=Annuity*7.119630492

Annuity=$218100/7.119630492

=$30633.61(Approx).