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Required: Use the present value tables to solve the following problems. Also, draw a time line for each problem to help visualize it. 1. The
Required: Use the present value tables to solve the following problems. Also, draw a time line for each problem to help visualize it. 1. The present value of an ordinary annuity of $2,000 per year for 5 years discounted at 4.5 percent You purchased a car and will finance $13,000. You will make 40 equal monthly payments and the loan has an annual rate of 12 percent (Hint: Be sure to use monthly interest rate). Determine the amount of each payment. 2. A proposed investment will provide cash flows of $20,000, $8,000, and $6,000 at the end of Years 1, 2, and 3, respectively. 3. Using a discount rate of 11% determine the present value of these cash flows. Find the present value of an investment that will pay $5,000 at the end of Years 10, 11, and 12. Use a discount rate of 8 percent. 4. 5. The present value of an annuity of $10,000 per year for 4 years discounted at 6 percent. 6. An initial investment of $14,740 is to be returned in 6 equal annual payments. Determine the amount of each payment if the interest rate is 11 percent. 7. XYZ Company leases a piece of equipment. They will make 10 annual payments of $50,000. The interest rate used in the lease is 6%. What was the fair value of the piece of equipment (i.e., the purchase price)
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