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That's my final exam I need to understand these type of Annuity questions. Can someone please explain to me how we've made the calculations here
That's my final exam I need to understand these type of Annuity questions. Can someone please explain to me how we've made the calculations here ? how does it work ? Like Frame B equals to 1000 means 1000 is Present value ? what does the R mean on the linear lines ? and lastly what are (a,b,c,d,e) what should we find ? Thank you so much in advance
Dr. Wachowicz ANNUITY PROBLEMS Financial Management Frame A: Cash receipt at the END of year time i 1 2 3 6 7 00 9 10 0 1 -- -- -- 4 LI R 5 LI R -- -- LI R R R (a) (b) (c) (d) (e) (f) Frame B: Cash receipt at the END of year time! 0 1 2 4 un 6 7 8 9 10 -- 3 LI R -- -- -- -- $ -- R 70 R A (g) (h) (i) (j) (k) (1) 1. Assume that the time lines in Frames A and B (above) depict annual cash flows of R dollars at the ends of the periods indicated. If the appropriate compound annual interest rate is 8 percent, what dollar value does R take on if the present value of the cash flow stream depicted in Frame A or Frame B equals $1,000 as of point (a)? point (b)? point (c)? point (g)? point (h)? point (1) ? Answers: Question 1 When the present value of the cash flow stream depicted in Frame A or Frame B equals $1,000 at point R equals (a), $292.23; (b), $250.44; (c), $231.91; (g), $364.83; (h), $312.60; (i), $289.44 3 Question 2 When the future value of the cash flow stream depicted in Frame A or Frame B equals $1,000 at point R equals (d), $170.44; (e), $157.83; (f), $135.28; (j), $212.72; (k), $197.01; (1), $168.83 0 time I 1 2 5 6 7 9 8 10 3 1 R 4 LI R -- -- $ R R R R(PVIFA8% (a) $1,000 $1,000 - R(PVIFA84, 5) * (PVIF8*, 2? $1,000 R(3.993) (.857) X R(3.422) R $1,000/3.422 $292.23 when the present value of the cash flow stream equals $1,000Step by Step Solution
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