In regards to Fundamentals of Corporate Finance, 10 ed. chapter 6, how do I solv

Question

In regards to Fundamentals of Corporate Finance, 10 ed. chapter 6, how do I solve this problem?

P6-52 Calculating Present Values [LO1]

A 20-year annuity of forty $5,000 semiannual payments will begin 11 years from now, with the first payment coming 11.5 years from now.

If the discount rate is 10 percent compounded monthly, what is the value of this annuity 5 years from now?

The probable answers for this question are:

a.)45,599.17, b.)46,529.76, c.) 84,572.23, d.) 8,088.51, e.) 51,402.04

What is the current value of the annuity?

The probable answers for this question are:

a.)28,280.26, b.)29724.06, c.) 4916.10, d.) 27,714.65, e.) 84,572.23

A 20-year annuity of forty $5,000 semiannual payments will begin 11 years from now, with the first payment coming 11.5 years from now.

Explanation / Answer

Calculation of Present value of annuity Discount rate(annual) 10% Discount rate(semiannual ) 5% first payment coming 11.5 years from now Value of the annuity 11.5 years from now Semiannual Payments $5,000 No of payments 40 PVAF (5%, 40) 17.1591 Value of the annuity 11.5 years from now $85,795.43 PVF (5%, 23) 0.32557131 Present Value of Annuity $27,932.53

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