PRESENT VALUE OF AN ANNUITY Find the present values of ...
PRESENT VALUE OF AN ANNUITY Find the present values of these ordinary annuities. Discounting occurs once a year
a. $400 per year for 10 years at 10%
0 1 2 3 4 5 6 7 8 9 10
| | | | | | | | | | |
PV = ? 400 400 400 400 400 400 400 400 400 400
With a financial calculator, simply enter the known values and then press the key for the unknown. Enter: N = 10, I = 10, PMT = -400, and FV = 0. PV = $2,457.83.
b. $200 per year for 5 years at 5%
| | | | | |
PV = ? 200 200 200 200 200
With a financial calculator, enter: N = 5, I = 5, PMT = -200, and FV = 0. PV = $865.90.
c. $400 per year for 5 years at 0%
0 1 2 3 4 5
| | | | | |
PV = ? 400 400 400 400 400
With a financial calculator, enter: N = 5, I = 0, PMT = -400, and FV = 0. PV = $2,000.00.
d. Rework Parts a, b, and c assuming they are annuities due
d. 1. 0 1 2 3 4 5 6 7 8 9 10
| | | | | | | | | | |
400 400 400 400 400 400 400 400 400 400
PV = ?
With a financial calculator on BEG, enter: N = 10, I = 10, PMT = -400, and FV = 0. PV = $2,703.61.
2. 0 1 2 3 4 5
| | | | | |
200 200 200 200 200
PV = ?
With a financial calculator on BEG, enter: N = 5, I = 5, PMT =
-200, and FV = 0. PV = $909.19.
3. 0 1 2 3 4 5
| | | | | |
400 400 400 400 400
PV = ?
With a financial calculator on BEG, enter: N = 5, I = 0, PMT =
-400, and FV = 0. PV = $2,000.00.
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10%
5%
0%
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