1. Assume you are planning to invest $100 each year for four years and will earn

Question

1. Assume you are planning to invest $100 each year for four years and will earn 10 percent per year. Determine the future value of this annuity due problem if your first $100 is invested now.
2. Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity due problem if your first $5,000 is invested now.
3. What is the percent value of a five year lease arrangement with an interest rate of 9 percent that requires annual payments of $10,000 per year with the first payment being due now?
4. Use financial calculator to solve for the interest rate involved in the following future value of an annuity due problem. The future value is $57,000, the annual payment is $7,500, and the time period is six years.

Explanation / Answer

1) FV = A{(1+r)^n-1} = 100{{1+0.1)^4-1}/i -= 464.1answer 2) 5000{(1+0.1)^6-1}/0.1 = 38578.05 answer 3) PV = A(1-{1+r}^-n)/i = 10000(1-(1+0.09)^-5)/0.09 = 38896.51 answer 4) 57000 = 7500 {(1+r)6-1}/i

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.