Problem 5-7 Present Values (LO3)

a-1.	Calculate the present value of an annual payment of $1,000 you would received for 10 years if the interest rate is 5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

a-2.	Calculate the present value of an annual payment of $800 you would received for 15 years if the interest rate is 5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

a-3.

Which option would you prefer?

	$800 a year for 15 years
	$1,000 a year for 10 years

b-1.	Calculate the present value of an annual payment of $1,000 you would received for 10 years if the interest rate is 20%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

b-2.	Calculate the present value of an annual payment of $800 you would received for 15 years if the interest rate is 20%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

b-3.

Which option would you prefer?

	$1,000 a year for 10 years
	$800 a year for 15 years