3. A series of cash flows consists of 6 annual payments of $5,000 each. a. Are the cash flows an annuity? What are the three characteristics of an annuity? b. Draw the timeline for the cash flows FOUR times and perform the calculation called for using the formulas and solving mathematically. Then write out the variables to input in the financial function of your calculator. The annual rate is 5.50%. ddd CF Timeline Ordinary Annuity - PVA I-----I- [---------------I CF Timeline Ordinary Annuity - FVA I--------------------1-----1-----1 PVA = n= i= PV= FVA = PMT = n= PMT = FV = i= Mode = PV= FV = Mode = CF Timeline Annuity Due = PVA due I------------------------------I PVA = CF Timeline Annuity Due - FVA due I---------------1-----1-----1-----I FVA = n= PMT= n= 1= FV = i= PV= Mode = PV= PMT = FV = Mode =

3. A series of cash flows consists of 6 annual payments of $5,000 each. a. Are the cash flows an annuity? What are the three characteristics of an annuity? b. Draw the timeline for the cash flows FOUR times and perform the calculation called for using the formulas and solving mathematically. Then write out the variables to input in the financial function of your calculator. The annual rate is 5.50%. ddd CF Timeline Ordinary Annuity - PVA I-----I- [---------------I CF Timeline Ordinary Annuity - FVA I--------------------1-----1-----1 PVA = n= i= PV= FVA = PMT = n= PMT = FV = i= Mode = PV= FV = Mode = CF Timeline Annuity Due = PVA due I------------------------------I PVA = CF Timeline Annuity Due - FVA due I---------------1-----1-----1-----I FVA = n= PMT= n= 1= FV = i= PV= Mode = PV= PMT = FV = Mode =

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 7MC

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Calculate the future value of the following annuities, assuming each annuity payment is made at the end of each compounding period. (FV of $1. PV of $1, EVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) 1. Annuity Payment $ 3,700 Annual Rate Interest Period Compounded Invested Future Value of Annuity 7.0% Semiannually 9 years 2. 6,700 8.0% Quarterly 5 years 3. 5,700 12.0% Annually 6 years
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