A 5-year annuity of ten $6,200 semiannual payments will begin 9 years from now,

Question

A 5-year annuity of ten $6,200 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now.

If the discount rate is 9 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If the discount rate is 9 percent compounded monthly, what is the value three years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If the discount rate is 9 percent compounded monthly, what is the current value of the annuity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If the discount rate is 9 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

SOLUTION:

k = .12/12 = .01

= (1.01)6 - 1 = .06152 = k

PVOA = PMT [1

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