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Calculate the present value of the following annuity streams: a. $6,000 received each year for 6 years on the last day of each year if your investments pay 7 percent compounded annually. b. $6,000 received each quarter for 6 years on the last day of each quarter if your investments pay 7 percent compounded quarterly. c. $6,000 received each year for 6 years on the first day of each year if your investments pay 7 percent compounded annually. d. $6,000 received each quarter for 6 years on the first day of each quarter if your investments pay 7 percent compounded quarterly.

Sagot :

anthougo

Answer:

The present value of:

a. $6,000 received each year for 6 years on the last day of each year if your investments pay 7 percent compounded annually.

= PV = $28,599.24

b. $6,000 received each quarter for 6 years on the last day of each quarter if your investments pay 7 percent compounded quarterly.

PV = $116,764.11

c. $6,000 received each year for 6 years on the first day of each year if your investments pay 7 percent compounded annually.

PV = $28,599.24

d. $6,000 received each quarter for 6 years on the first day of each quarter if your investments pay 7 percent compounded quarterly.

PV = $118,807.49

Explanation:

a) Data and Calculations:

Annuity streams per year or quarter = $6,000

Period of annuity = 6 years

Interest rate = 7% compounded

From an online financial calculator:

a. N (# of periods)  6

I/Y (Interest per year)  7

PMT (Periodic Payment)  6000

FV (Future Value)  0

Results

PV = $28,599.24

Sum of all periodic payments $36,000.00

Total Interest $7,400.76

b. N (# of periods)  24

I/Y (Interest per year)  1.75

PMT (Periodic Payment)  6000

FV (Future Value)  0

Results

PV = $116,764.11

Sum of all periodic payments $144,000.00

Total Interest $27,235.89

c. N (# of periods)  6

I/Y (Interest per year)  7

PMT (Periodic Payment)  6000

FV (Future Value)  0

Results

PV = $28,599.24

Sum of all periodic payments $36,000.00

Total Interest $7,400.76

d. N (# of periods)  24

I/Y (Interest per year)  1.75

PMT (Periodic Payment)  6000

FV (Future Value)  0

Results

PV = $118,807.49

Sum of all periodic payments $144,000.00

Total Interest $25,192.51

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