Present Value of an Annuity Determine the present value of $120,000 to be received at the end of each of four years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.
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ANSWER
A) COMPUTATION OF PRESENT VALUE IN EACH 4 YEAR
First year | $ 114286 |
Second year | $ 108844 |
Third year | $ 103661 |
Fourth year | $ 98724 |
Total present value | $ 425515 |
B) Computation of present value using Present value annuity of $1 table on exhibit 7
$ 425514 |
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- Value of an Annuity Using the appropriate tables, solve each of the following. Required: 1. Beginning December 31, 2020, 5 equal withdrawals are to be made. Determine the equal annual withdrawals if 30,000 is invested at 10% interest compounded annually on December 31, 2019. 2. Ten payments of 3,000 are due at annual intervals beginning June 30, 2020. What amount will be accepted in cancellation of this series of payments on June 30, 2019, assuming a discount rate of 14% compounded annually? 3. Ten payments of 2,000 are due at annual intervals beginning December 31, 2019. What amount will be accepted in cancellation of this series of payments on January 1, 2019, assuming a discount rate of 12% compounded annually?Present Value of an Annuity Determine the present value of $110,000 to be received at the end of each of four years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.Present value of an annuity Determine the present value of $110,000 to be received at the end of each of 4 years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. $ c. Why is the present value of the four $110,000 cash receipts less than the $440,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years.
- Present Value of an Annuity Determine the present value of $340,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.Present value of an annuity Determine the present value of $200,000 to be received at the end of each of 4 years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. c. Why is the present value of the four $200,000 cash receipts less than the $800,000 to be received in the future? The present value is less due to over the 4 years.Present Value of an Annuity Determine the present value of $170,000 to be received at the end of each of four years, using an interest rate of 5.5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. c. Why is the present value of the four $170,000 cash receipts less than the $680,000 to be received in the future? The present value is less due to over the 4 years. Exhibit 5 Present Value of $1 at Compound Interest Periods 4% 4%% 5% 5%% 6% 62% 7% 10% 11% 12% 13% 0.96154 0.956940 0.95238 0.94787 0.94340 0.93897 0.93458 0.90909 0.90090 0.89286 0.88496 2 0.92456 0.915730 0.90703 0.89845 0.89000 0.88166 0.87344 0.82645 0.81162 0.79719 0.78315 3 0.88900 0.876300 0.86384 0.85161 0.83962 0.82785 0.81630 0.75131 0.73119 0.71178…
- Present Value of an Annuity Determine the present value of $240,000 to be received at the end of each of four years, using an interest rate of 5.5%%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value table in Exhibit 10. Round to the nearest whole dollar. LA... C. Why is the present value of the four $240,000 cash receipts less than the $960,000 to be received in the future? The present value is less due to over the 4 years. A... A... A... Check My Work 3 more Check My Work uses remaining. Previous Next %24 %24 %24 %24 %24Present Value of an Annuity Determine the present value of $200,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year $fill in the blank 1 Second Year $fill in the blank 2 Third Year $fill in the blank 3 Fourth Year $fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value table in Exhibit 10. Round to the nearest whole dollar. $fill in the blank 6 c. Why is the present value of the four $200,000 cash receipts less than the $800,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years.Present value of an annuity Determine the present value of $190,000 to be received at the end of each of 4 years, using an interest rate of 5.5%, compounded annuall a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year X Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. SA
- Present Value of an Annuity Determine the present value of $250,000 to be received at the end of each of four years, using an interest rate of 5.5%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year $fill in the blank 1 Second Year fill in the blank 2 Third Year fill in the blank 3 Fourth Year fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value table in Exhibit 10. Round to the nearest whole dollar.$fill in the blank 6Present value of an annuity Determine the present value of $160,000 to be received at the end of each of 4 years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present valuePresent Value of an Annuity Determine the present value of $310,000 to be received at the end of each of four years, using an interest rate of 6%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year $fill in the blank 1 Second Year fill in the blank 2 Third Year fill in the blank 3 Fourth Year fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.$fill in the blank 6 c. Why is the present value of the four $310,000 cash receipts less than the $1,240,000 to be received in the future?The present value is less due to..........................over the 4 years.