Morgan Jennings, a geography professor, invests $81,000 in a parcel of land that is expected to increase in value by 14 percent per year for the next six years. He will take the proceeds and provide himself with a 12-year annuity. Assuming a 14 percent interest rate, how much will this annuity be? Use Appendix A and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Annuity value Appendix A Future value of $1, FVF FV = PV(1 + i)" Percent Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 1 1.010 1.020 1.030 1.040 1.050 1.060 1.070 1.080 1.090 1.100 1.110 2 1.020 1.040 1.082 1.103 1.124 1.145 1.166 1.188 1.210 1.232 1.061 1.093 3 1.061 1.125 1.158 1.191 1.225 1.260 1.295 1.331 1.368 1.030 1.041 4 1.126 1.170 1.216 1.262 1.360 1.464 1.518 5 1.051 1.082 1.104 1.126 1.159 1.338 1.311 1.403 1.501 1.469 1.611 1.685 6 1.587 1.217 1.265 1.316 1.369 1.062 1.072 1.083 1.276 1.340 1.407 1.477 7 1.149 1.419 1.504 1.594 1.714 1.606 1.718 1.772 1.949 2.144 1.870 2.076 2.305 8 1.172 1.851 9 1.423 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.689 1.838 1.999 2.358 2.558 1.094 1.105 1.116 1.195 1.219 1.243 10 1.412 1.539 1.677 1.828 1.993 2.172 2.367 2.580 2.813 3.066 3.342 3.642 1.480 2.159 2.594 1.551 1.629 1.710 1.796 2.839 1.791 1.898 11 2.853 3.138 3.152 3.498 12 1.127 2.012 1.967 2.105 2.252 2.410 2.579 1.539 1.601 1.665 1.732 1.268 1.294 1.319 2.332 2.518 2.720 2.937 13 2.133 3.883 1.138 1.149 1.161 14 1.469 1.513 1.558 1.886 1.980 2.079 2.261 4.310 3.452 3.797 4.177 4.595 15 1.346 1.801 2.759 3.172 4.785 2.397 2.540 16 1.173 1.373 1.605 1.873 2.952 3.426 3.970 5.311 2.183 2.292 17 1.184 1.400 1.653 2.693 3.159 3.700 4.328 5.054 1.948 2.026 18 1.196 1.428 1.702 2.854 3.380 3.996 4.717 19 1.457 1.754 3.026 5.142 3.617 3.870 20 1.208 1.220 1.282 1.348 1.489 1.486 1.641 1.806 2.094 2.107 2.191 2.666 3.243 2.407 2.527 2.653 3.386 4.322 7.040 11.467 3.207 4.292 4.316 4.661 6.848 25 5.560 6.116 6.727 10.835 17.449 45.259 5.895 6.544 7.263 8.062 13.585 22.892 65.001 184.57 5.604 8.623 13.268 30 2.427 5.743 5.427 7.612 14.974 1.811 2.208 10.063 21.725 40 3.262 4.801 31.409 10.286 18.420 50 1.645 2.692 4.384 7.107 29.457 46.902 74.358 117.39 Appendix A (concluded) Future value of $1 Percent Period 12% 13% 14% 15% 16% 17% 18% 19% 20% 25% 30% 1 1.120 WN - 1.130 1.277 1.140 1.300 1.482 1.150 1.323 1.160 1.346 1.170 1.369 1.180 1.392 1.190 1.416 1.250 1.563 1.300 1.690 1.254 1.405 1.574 1.200 1.440 1.728 2.074 1.443 1.521 1.561 1.602 1.643 1.685 1.953 2.197 4 1.689 1.749 1.811 1.874 1.939 2.005 2.441 2.856 1.630 1.842 5 1.762 2.011 2.100 2.192 2.386 2.488 3.052 3.713 1.925 2.195 2.288 2.700 6 1.974 2.082 2.313 2.436 2.565 2.840 2.986 3.815 4.827 7 2.211 2.353 2.826 3.001 3.185 3.379 3.583 4.768 8 2.476 2.502 2.853 3.252 2.660 3.059 3.518 3.511 2.658 3.004 4.300 5.960 3.759 4.435 4.021 4.785 9 4.108 5.160 7.451 2.773 3.106 6.276 8.157 10.604 13.786 17.922 23.298 10 5.234 3.278 3.803 4.411 5.117 5.936 5.696 3.395 3.836 6.192 11 3.479 4.046 4.652 5.350 6.176 3.707 4.226 4.818 5.492 6.777 7.430 4.807 5.624 6.580 7.699 9.313 11.642 14.552 12 4.335 8.064 3.896 4.363 7.288 8.599 8.916 10.699 13 6.153 9.596 30.288 6.886 7.988 14 4.887 5.474 6.130 4.898 5.535 6.254 7.067 7.986 7.076 8.137 15 6.261 7.138 8.137 9.276 10.575 9.007 10.539 12.330 10.147 11.974 14.129 16.672 18.190 22.737 28.422 35.527 11.420 13.590 16.172 19.244 9.266 10.748 12.468 12.839 15.407 18.488 16 39.374 51.186 66.542 86.504 9.358 10.761 17 14.426 22.186 44.409 55.511 18 9.024 16.879 19.673 22.091 26.623 112.46 6.866 7.690 8.613 9.646 17.000 12.375 14.232 14.463 16.777 19 10.197 12.056 19.748 23.214 31.948 69.389 20 11.523 16.367 19.461 27.393 38.338 86.736 23.106 50.658 27.252 32.429 77.388 184.68 13.743 26.462 50.950 25 32.919 62.669 95.396 21.231 39.116 264.70 40.874 85.850 146.19 190.05 705.64 2,620.0 36,119.0 497,929.0 30 66.212 807.79 29.960 93.051 289.00 111.07 533.87 143.37 750.38 40 132.78 188.88 267.86 378.72 1,051.7 5,988.9 237.38 1,469.8 9,100.4 7,523.2 70,065.0 50 450.74 700.23 1,083.7 1,670.7 2,566.2 3,927.4 Appendix D Present value of an annuity of $1, PVIFA PVA= A 1- - (1 + i)" 1% 3% 4% 5% 9% Period 1. 1 ............... 2% 0.980 1.942 2.884 2 ...... 0.990 1.970 2.941 3.902 4.853 5.795 0.962 1.886 2.775 3.630 4.452 5.242 0.952 1.859 2.723 3.546 3 8% 0.926 1.783 2.577 3.312 3.993 4.623 10% 0.909 1.736 2.487 3.170 11% 0.901 1.713 2.444 3.102 3.696 4.231 12% 0.893 1.690 2.402 3.037 3.605 4.111 4 3.808 5 4.713 5.601 0.917 1.759 2.531 3.240 3.890 4.486 5.033 5.535 5.995 4.329 5.076 3.791 4.355 0.971 1.913 2.829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 6 7 6.728 6.472 5.206 4.868 4.712 4.564 5.786 6.463 8 7.325 6.002 6.733 7.435 7.652 8.566 5.146 5.537 4.968 5.328 9 8.162 7.108 5.335 5.759 6.145 6.495 10 7.722 9.471 10.368 8.983 9.787 5.747 6.247 6.710 7.139 7.536 7.904 5.889 6.207 11 8.111 8.760 9.385 9.986 8.306 Percent 6% 7% 0.943 0.935 1.833 1.808 2.673 2.624 3.465 3.387 4.212 4.100 4.917 4.767 5.582 5.389 6.210 5.971 6.802 6.515 7.360 7.024 7.887 7.499 8.384 7.943 8.853 8.358 9.295 8.745 9.712 9.108 10.106 9.447 10.477 9.763 10.828 10.059 11.158 10.336 11.470 10.594 12.783 11.654 13.765 12.409 15.046 13.332 15.762 13.801 6.418 6.805 7.161 7.487 5.650 5.938 6.194 6.424 12 11.255 12.134 10.575 11.348 8.863 9.394 6.814 7.103 6.492 6.750 13 10.635 11.296 14 13.004 10.563 8.244 6.628 6.811 15 11.938 12.106 12.849 13.578 14.292 13.865 14.718 15,562 16 9.899 10.380 10.838 11.274 11.690 12.085 7.786 8.061 8.313 8.544 11.118 11.652 12.166 12.659 13.134 12.561 13.166 13.754 8.559 8.851 9.122 9.372 9.604 7.367 7.606 7.824 8.022 8.201 8.365 17 6.982 7.191 7.379 7.549 7.702 7.839 6.974 7.120 18 7.250 14.992 15,678 8.756 8.950 19 14.324 7.366 20 9.818 7.963 16.398 17.226 18.046 22.023 25.808 32.835 39.196 16.351 19.523 22.396 13.590 15.622 12.462 14.094 9.129 9.823 25 8.514 9.077 10.675 8.422 14.877 17.413 19.600 23.115 25.730 7.469 7.843 8.055 30 17.292 15.372 11.258 10.274 9.427 8.694 40 27.355 31.424 19.793 21.482 17.159 18.256 11.925 12.233 10.757 10.962 9.779 9.915 8.951 9.042 8.244 8.304 50 Appendix D (concluded) Present value of an annuity of $1 20% 25% 30% 35% 40% Period 1 .......... 2 13% 0.885 1.668 15% 0.870 1.626 2.283 2.855 17% 0.855 1.585 2.210 2.743 0.714 1.224 50% 0.667 1.111 Percent 19% 0.840 1.547 2.140 2.639 14% 0.877 1.647 2.322 2.914 3.433 3.889 4.288 16% 0.862 1.605 2.246 2.798 3.274 3.685 3 4 18% 0.847 1.566 2.174 2.690 3.127 3.498 2.361 2.974 1.407 0.769 1.361 1.816 2.166 0.800 1.440 1.952 2.362 2.689 2.951 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 0.741 1.289 1.696 1.997 2.220 2.385 1.589 1.849 1.605 5 2.035 3.517 3.998 3.352 3.784 3.199 3.589 3.058 3.410 2.436 2.643 6 2.168 1.737 1.824 1.883 1.922 7 3.922 3.706 2.263 4.423 4.799 4.160 4.487 4.039 4.344 3.812 4.078 3.161 3.329 2.802 2.925 2.508 2.598 8 4.639 4.207 3.954 2.331 9 4.946 4.451 4.303 4.163 3.463 3.019 2.665 +++ 2.379 1.948 5.132 5.426 4.772 5.019 4.607 4.833 4.031 4.192 10 5.216 4.659 4.339 3.571 2.715 2.414 11 5.453 5.660 2.752 4.494 4.656 4.793 5.234 5.421 2.438 5.029 5.197 3.092 3.147 3.190 3.656 3.725 1.965 1.977 1.985 12 5.687 5.918 6.122 6.302 2.779 2.799 13 5.842 3.223 4.486 4.611 4.715 4.802 4.876 5.583 5.724 5.342 5.468 +++++ 4.910 5.008 4.327 4.439 4.533 4.611 4.675 4.730 2.456 2.469 2.478 1.990 1.993 14 3.249 2.814 15 6.002 6.142 6.265 5.092 3.268 2.484 16 5.162 5.847 5.954 6.047 6.128 6.198 17 2.825 2.834 2.840 4.836 4.988 5.118 5.229 5.324 5.405 5.475 5.534 5.584 5.628 5.766 5.829 5.871 5.880 5.575 5.668 5.749 5.818 5.877 5.929 6.097 5.222 5.273 5.316 18 6.462 6.604 6.729 6.840 6.938 7.025 7.330 7.496 7.634 7.675 1.995 1.997 1.998 1.999 1.999 3.780 3.824 3.859 3.887 3.910 3.928 3.942 3.954 3.985 6.373 6.467 6.550 6.623 6.873 7.003 7.105 7.133 19 4.938 4.988 5.033 5.070 5.101 5.195 5.235 5.258 3.283 3.295 3.304 3.311 3.316 3.329 20 25 4.775 4.812 4.843 4.870 4.948 4.979 4.997 4.999 2.844 2.848 2.850 2.856 5.353 5.467 2.489 2.492 2.494 2.496 2.497 2.499 2.500 2.500 2.500 6.259 6.464 6.566 6.642 6.661 1.999 2.000 30 6.177 6.233 6.246 5.517 5.548 3.995 3.999 4.000 40 3.332 3.333 3.333 2.857 2.857 2.000 2.000 50 5.554 5.262 2.857 2 2.000