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Present Value of an Annuity Determine the present value of $130,000 to be received at the end of each of four years, using an
Present Value of an Annuity Determine the present value of $130,000 to be received at the end of each of four years, using an interest rate of 5.5%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year Second Year Third Year Fourth Year Total present value b. By using the present value table in Exhibit 10. Round to the nearest whole dollar. c. Why is the present value of the four $130,000 cash receipts less than the $520,000 to be received in the future? The present value is less due to l over the 4 years. Present Value of $1 at Compound Interest EXHIBIT 8 Periods 4% 4% 1 0.96154 0.95694 5% 0.95238 2 0.92456 0.91573 0.90703 3 0.88900 0.87630 0.86384 51% 0.94787 0.89845 0.89000 0.88166 0.85161 0.83962 0.82785 6% 614% 0.94340 0.93897 7% 0.93458 0.87344 10% 0.90909 0.82645 11% 12% 0.90090 0.89286 0.88496 13% 0.81630 0.75131 0.81162 0.79719 0.73119 0.71178 0.78315 0.69305 4 0.85480 0.83856 0.82270 0.80722 0.79209 0.77732 0.76290 5 0.82193 0.80245 0.78353 0.76513 0.74726 0.72988 0.71299 6 0.79031 0.76790 0.74622 0.72525 0.70496 0.68533 0.66634 7 0.75992 0.75483 0.71068 0.68744 0.66506 0.64351 8 0.73069 0.70319 0.67684 0.65160 0.62741 0.60423 9 0.70259 0.67290 0.64461 0.61763 0.59190 0.56735 10 0.67556 0.64393 0.61391 0.58543 0.55839 0.53273 0.68301 0.56743 0.62092 0.59345 0.54276 0.53464 0.50663 0.48032 0.56447 0.51316 0.48166 045235 0.42506 0.62275 043393 0.40388 0.37616 0.46651 0.58201 0.39092 0.36061 033288 0.54393 0.42410 0.29459 0.50835 0.38554 035218 0.32197 0.63552 0.65873 0.61332
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