Question

# PRESENT VALUE OF AN ANNUITY Find the present values of these ordinary annuities. Discounting occurs once...

PRESENT VALUE OF AN ANNUITY

Find the present values of these ordinary annuities. Discounting occurs once a year. Round your answers to the nearest cent.

\$600 per year for 10 years at 6%.

\$

\$300 per year for 5 years at 3%.

\$

\$800 per year for 10 years at 0%.

\$

Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.

\$600 per year for 10 years at 6%.

\$

\$300 per year for 5 years at 3%.

\$

\$800 per year for 10 years at 0%.

\$

Present Value :

\$600 per year for 10 years at 6%

= \$ 600 * 1/(1.06)^ 1 + \$ 600 * 1/(1.06)^2 + \$ 600 * 1/(1.06)^3+...+ \$ 600 * 1/(1.06)^10

= \$ 4,416.05

\$300 per year for 5 years at 3%

= \$ 300 * 1/(1.03) ^ 1+ \$ 300 * 1/(1.03) ^ 2 + \$ 300 * 1/(1.03) ^ 3 + \$ 300 * 1/(1.03) ^ 4 +\$ 300 * 1/(1.03) ^ 5

= \$ 1,373.91

\$800 per year for 10 years at 0%.

= \$ 800 * 1/(1) ^ 1+ \$ 800 * 1/(1) ^ 2 + \$ 800 * 1/(1) ^ 3 + ...+ \$ 800 * 1/(1) ^ 10

= \$ 8,000

Annuities Due :

\$600 per year for 10 years at 6%.:

= Present Value * ( 1+ Rate of Interes/100)

= \$ 4,416.05* (1.06)

= \$ 4,681.01

\$300 per year for 5 years at 3%.

= Present Value * ( 1+ Rate of Interes/100)

= \$ 1,373.91 * (1.03)

= \$ 1,415.13

\$800 per year for 10 years at 0%.

= Present Value * ( 1+ Rate of Interes/100)

=\$ 8,000 * (1+0/100)

= \$ 8,000

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