IB A ttempt 1/10 for 10 pts. Part 1 What is the present value of the cash flows? Correct With an ordinary annuity, cash flows occur at the end of each period. The first cash flow thus occurs one period from now, rather than now. A traditional mortgage is an example of an ordinary annuity. We can use the annuity formula to find its present value: 250 0.004 (1 +0.004) = 13,312 Using a financial calculator. NIY PVPMT FV Inputs 60 0.4 -2500 Computea 13,312 Using Excel (do not enter the thousands separators): =PV[rate, nper, pnt) =PV(0.004, 60, -250) =13,312 Given that this is a loan, the present value of all monthly payments is the initial loan balance, le the amount borrowed Attempt 210 for 10 pts Part 2 We can use the annuity formula to find its present value: PV = (1-17)) 250 0.004 (1 +0.004) = 13,312 Using a financial calculator. NIY PV Inputs 60 0.4 Compute 13,312 PMT FV -2500 Using Excel (do not enter the thousands separators): =PV(rate, nper, prt) =PV(0.004, 60, -250) =13,312 Given that this is a loan, the present value of al monthly payments is the initial loan balance, i.e., the amount borrowed. Part 2 IB Attempt 2710 for 10 pts. What is the future value of the cash flows? Submit