# Annuity: Present Value## Inputs- **Payment**: $80- **Discount Rate/Period**: 6%- **Number of Periods**: 5## Present Value using a Time Line| Period | Cash Flows | Present Value of Each Cash Flow ||--------|------------|---------------------------------|| 0 | 0 | 0 || 1 | 80 | 75.4717 || 2 | 80 | 71.19972 || 3 | 80 | 67.16954 || 4 | 80 | 63.36749 || 5 | 80 | 59.78065 |- **Present Value**: [Calculated value in yellow cell]## Annuity Present Value using the Formula- **Present Value**: [Calculated value in yellow cell]## Annuity Present Value using the PV Function- **Present Value**: [Calculated value in yellow cell] ### Explanation:This table calculates the present value of an annuity. It includes input factors such as the payment amount, discount rate, and number of periods. The present value for each cash flow is calculated for each time period. The final results using different calculation methods are highlighted in yellow cells. 2. An annuity pays $80.00 each period for 5 periods. For these cash flows, the appropriate discount rate/period is 6.0%. What is the present value of this annuity? Use worksheet “Annuity-PV”.

Annuity Present Value Inputs Payment $80 Discount Rate/Period 6% Number of Periods 5 Present Value using a Time Line Period 1 2 4 Cash Flows 80 80 80 80 80 Present Value of Each Cash Flow 75.4717 71.19972 67.16954 63.36749 59.78065 Present Value Annuity Present Value using the Formula Present Value Annuity Present Value using the PV Function Present Value

Annuity Present Value Inputs Payment $80 Discount Rate/Period 6% Number of Periods 5 Present Value using a Time Line Period 1 2 4 Cash Flows 80 80 80 80 80 Present Value of Each Cash Flow 75.4717 71.19972 67.16954 63.36749 59.78065 Present Value Annuity Present Value using the Formula Present Value Annuity Present Value using the PV Function Present Value

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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What is the future value?
Future value interest factor of an ordinary annuity of $1 per period at i% for n periods, FVIFA(i,n). 3.5% 4.0% 4.5% 8.0% 8.5% 9.5% Period 0.5% 1.0% 1.0000 1.0000 2.0050 2.0100 1 1.5% 2.0% 2.5% 1.0000 1.0000 1.0000 20150 2.0200 2.0250 2 3.2781 3 1.0000 2.0950 3.2940 4.6070 6.0446 4 7 8.1420 9.5491 8 9 10 16.3856 16 8699 18.5312 21.3843 24.5227 27.9750 31.7725 35.9497 26.9964 28.2129 30.8402 40.5447 45.5992 51.1591 57.2750 64.0025 71.4027 58.1767 76.7898 824164 3.0% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 9.0% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0300 2.0350 2.0400 2.0450 2.0500 2.0550 2.0600 2.0650 2.0700 2.0750 2.0800 2.0850 2.0900 3.0150 3.0301 3.0452 3.0604 3.0756 3.0909 3.1062 3.1216 3.1370 3.1525 3.1680 3.1836 3.1992 3.2149 3.2306 3.2464 4.0301 4.0604 3.2622 4.0909 4.1216 4.1525 4.1836 4.2149 4.2465 4.2782 4.3101 4.3423 4.3746 4.4072 4.4399 4.4729 4.5061 4.5395 5 5.0503 4.5731 5.1010 5.1523 5.2040 5.2563 5.3091 5.3625 5.4163 5.4707…
7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. O An annuity is a series of egual payments made at fixed intervals for a specified number of periods. O Ordinary annuities make fixed payments at the beginning of each period for a certain time period. O An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. O An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? O An investment in a certificate of deposit (CD) A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time Luana loves shopping for clothes, but considering the state of the economy, she has decided…
What is the future value?
Use this formula to identify each item listed below ??=250((1+0.042512)12×15−1)÷(0.042512)FV=250((1+0.042512)12×15−1)÷(0.042512) payment compounded Interest rate time
Present value of an annuity Consider the following cases. Case ◄AUA- E Amount of annuity $ 12.000 55.000 700 140.000 22.500 Interest rate 12 20 5 10 Period (years) a. Calculate the present value of the annuity assuming that it is (1) An ordinary annuity, mu 9 7 b. Compare your findings in parts al 1) and a(2). All else being identical, which of annuity-ordinary or annuity due-is preferable? Explain why. Personal Finance Problem Tume value-Annuities - Marian Kirk wishes to select the better of two 10-year annuines, C and D. Annuity C is an ordinary annuity of $2,500 per year for 10 years. Annuity D is an annuity due of $2,200 per year for 10 years. delen future value of both annuities at the end of year 10, assuming that
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Consider the following cash flows: Year Cash Flow 0 -$ 29,200 123 14,500 14,400 10,800 a. What is the profitability index for the cash flows if the relevant discount rate is 12 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. What is the profitability index if the discount rate is 17 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. c. What is the profitability index if the discount rate is 24 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. Profitability index b. Profitability index c. Profitability index
annuity payment years interest rate2400 7 5%1400 9 40/612580 17 6%32150 23 8% calcularte the cash flow
Consider the following timeline: Date 0 i + $500 2 OA. $666. B. $605. C. $500. OD. $650. 3 Cash flow If the current market rate of interest is 10%, then the future value of the cash flows on this timeline is closest to:
I dont just need answer, i want full explanation
Use the table below to answer the following questions: Present Value of an Annuity of 1 Future Value of an Annuity of 1 Period 4% 5% 8% 10% 4% 5% 8% 10% 4 3.6299 3.5460 3.3121 3.1699 4.2465 4.3101 4.5061 4.6410 5 4.4518 4.3295 3.9927 3.7908 5.4163 5.5256 5.8666 6.1051 6 5.2421 5.0757 4.6229 4.3553 6.6330 6.8019 7.3359 7.7156 7 6.0021 5.7864 5.2064 4.8684 7.8983 8.1420 8.9228 9.4872 8 6.7327 6.4632 5.7466 5.3349 9.2142 9.5491 10.6366 11.4359 9 7.4353 7.1078 6.2469 5.7590 10.5828 11.0266 12.4876 13.5795 10 8.1109 7.7217 6.7101 6.1446 12.0061 12.5779 14.4866 15.9374 11 8.7605 8.3064 7.1390 6.4951 13.4864 14.2068 16.6455 18.5312 Bobby receives alimony payments every 6 months and the next payment is tomorrow. Median homes go for $950,000 and he wants to save $190,000 in 4 years. How much money should Bobby put away into an investment each time he receives alimony payments if he can get a 8% return a year? Group of answer choices…

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