Question
Are these correct? 1.If interest rates are 8 percent, what is the future value of a $400 annuity payment over six years? Unless otherwise directed,
Are these correct?
1.If interest rates are 8 percent, what is the future value of a $400 annuity payment over six years? Unless otherwise directed, assume annual compounding periods.
Recalculate the future value at 6 percent interest and 9 percent interest.
400/.08*((1+.08)^6-1)=$2,934.37
400/.06*((1+.06)^6-1)=$2,790.13
400/.09*((1+.09)^6-1)=$3,009.33
2.If interest rates are 5 percent, what is the present value of a $900 annuity payment over three years? Unless otherwise directed, assume annual compounding periods.
Recalculate the present value at 10 percent interest and 13 percent interest.
900/.05*((1-1)(1+.05)^3)=$2,450.92
900/.10*((1-1)(1+.10)^3)=$2,238.17
900/.13*((1-1)(1+.13)^3)=$2,125.04
3.What is the present value of a series of $1150 payments made every year for 14 years when the discount rate is 9 percent?
Recalculate the present value using discount rate of 11 percent and 12 percent.
1150/.09*(1-1/(1+.09)^14)=$8,954.07
1150/.11*(1-1/(1+.11)^14)=$8,029.15
1150/.12*(1-1/(1+.12)^14)=$7,622.39
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