Present Value of an Annuity Determine the present value of $330,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit S. Round to the nearest whole dollar, First year Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. c. Why is the present value of the four $330,000 cash receipts less than the $1,320,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years Exhibit 5 Present Value of $1 at Compound Interest Periods 1 2 3 4 5 6 7 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 075992 0.73069 0.70259 0.67556 44% 0.956940 0.915730 0.876300 0.838560 0.802450 0.767900 0.734830 0.703190 0672900 0.643930 5% 0.95238 0.90703 0.1384 0.82270 0.78353 0.74622 0.71058 0.67684 0.64461 0.61391 57% 0.94787 089845 0.85161 0.80722 0.76513 0.72525 0.66744 0.65160 061763 0.58543 6% 0.94340 0.19000 0.83962 0.79209 0.74726 0.70496 066506 062741 059190 0.55839 699% 0.93897 0.88166 0.92785 0.77732 0.72988 068533 0.64351 0.60423 0.56735 0.53273 796 0.93458 0.87344 0.81630 0.76290 0.71299 0.66634 0.62275 0.58201 054393 050035 10% 0.90909 0.82645 0.75131 0.68301 062092 0.56447 0.51316 0.46651 0.42410 0.38554 11% 0.90090 0.81162 0.73119 0.65873 0.59345 0.33464 0.48166 043393 0.39092 0.35218 12% 0.89206 0.79719 0.71170 0.63552 0.56743 0.50663 045235 0.40388 0.36061 0.32197 13% 0.85496 0.78315 0.69305 061332 054276 043032 0.42506 0.37616 0.3320 0.29459 9 10 Exhibit7 Prosent Value of an Annuity of $1 at Compound Interest Periods 1 10 0.94140 7% 0.93450 0.94 166010 2.16115 4 202432 54% 01787 134632 269793 50515 427028 4.99553 568297 0.85154 188609 2.7509 36290 445192 5.24214 6.00205 6.73274 7.43533 1111010 5 6 7 44 0.95694 1.87267 2.74896 3.50753 430990 5.1577 5.39270 659589 726879 7.91272 5% 0.95230 1.35941 2.72325 3.54595 432900 5.07569 5.7637 6.46321 7.10782 7.72173 2.67301 346511 42171 4.91732 5.58238 6.20979 6.80169 7.36009 0.0397 1.2003 26418 3.42510 4. 1556 4.34101 5.48452 606875 6,65610 7.188 410020 4.76654 530920 597130 651523 702350 0.90909 1.73554 24 3.1697 1.79079 435526 482 533493 5.7502 6.14457 0.5000 1.71252 2.44371 3.10245 3690 423054 41220 5.14612 553705 5.89923 129 0.8920 16005 24010 303735 3.60470 4.11141 456376 496764 5.32005 5.65002 3.51723 399755 443261 4.79677 5.13166 5.42624 9 10 695220 753763
