A 5-year annuity of 10 $9,000 semiannual payments will begin 9 years from now, with the first...
Question:
A 5-year annuity of 10 $9,000 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.
Requirement 1:
If the discount rate is 9 percent compounded semiannually, what are the value of this annuity five years and three years from now? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
Requirement 2:
What is the value of the annuity today? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Present value of annuity:
Annuity refers to a future series of uniform cash flows to be received or paid in equal periodic intervals. Present value of annuity is the sum of individual present values of all the cash flows in the series.
Answer and Explanation: 1
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View this answerPresent value of annuity due
= Annuity x PVAF(r,n)
PVAF or present value annuity factor is the sum of discounting factors at a given rate r for n num...
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How to Calculate the Present Value of an Annuity
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Chapter 8 / Lesson 3
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Learn how to find present value of annuity using the formula and see its derivation. Study its examples and see a difference between Ordinary Annuity and Annuity Due.
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