Q1

Present Value of an Annuity

On January 1, 2016, you win $1,440,000 in the state lottery. The $1,440,000 prize will be paid in equal installments of $120,000 over 12 years. The payments will be made on December 31 of each year, beginning on December 31, 2016. If the current interest rate is 7%, determine the present value of your winnings. Use Table below. Round to the nearest whole dollar.

Q2:

resent Value of Bonds Payable; Discount

Pinder Co. produces and sells high-quality video equipment. To finance its operations, Pinder Co. issued $25,000,000 of five-year, 7% bonds, with interest payable semiannually, at a market (effective) interest rate of 9%.

Determine the present value of the bonds payable, using the present value tables in Exhibit 8 and Exhibit 10. Round to the nearest dollar.

Q3:

Present Value of Bonds Payable; Premium

Mason Co. issued $680,000 of five-year, 11% bonds with interest payable semiannually, at a market (effective) interest rate of 10%.

Determine the present value of the bonds payable, using the present value tables in Exhibit 4 and Exhibit 5. Round to the nearest dollar. $

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