Question
Compute the Present Value of a 5 -year ordinary annuity (where payments are received at the end of a time period), if the yearly annuity
Compute the Present Value of a 5 -year ordinary annuity (where payments are received at the end of a time period), if the yearly annuity is $10,000 and the relevant interest rate is 4%. Complete the following table, showing the Present Value Factors and the Present Value of each Annuity Payment for years 2 through 5. In addition, calculate the Present Value of this annuity using the proper Excel function. Copy and the paste the Excel function showing the parameters used to calculate the Present Value of the Annuity. Also compute the Present Value of an Annuity Due using the same parameters.
| Annual Interest Rate = | 4% | ||
| Year | Ordinary Annuity | Present Value Factor | Present Value of Annuity Payment |
| 1 | $10,000 | 0.96154 | $9,615.38 |
| 2 | $10,000 | ||
| 3 | $10,000 | ||
| 4 | $10,000 | ||
| 5 | $10,000 | ||
Present Value of Ordinary Annuity = _____________________
Present Value of Annuity Due = _____________________
Excel Formula/Function:
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