Question

For each of the following annuities, calculate the present value. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Present Value Annuity Payment Years Interest Rate
$ 2,100 7 5 %
1,310 9 4 %
11,830 19 6 %
30,650 27 8%

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Annuity Payment Years Interest Rate

$ 2,100 7 5 %

1,310 9 4 %

11,830 19 6 %

30,650 27 8%

To calculate the present value, we need to use the following formula:

PV= A*{(1/i) - 1/[i*(1 + i)^n]}

A= annual payment

a)

PV= 2,100*{(1/0.05) - 1 / [(0.05*(1.05^7)]}

PV= $12,151.38

b)

PV= 1,310*{(1/0.04) - 1 / [(0.04*(1.04^9)]}

PV= $9,740.28

c)

PV= 11,830*{(1/0.06) - 1 / [(0.06*(1.06^19)]}

PV= $132,000.52

d)

PV= 30,650*{(1/0.08) - 1 / [(0.08*(1.08^27)]}

PV= $335,162.8