Problem 5-7 Present Values (LO3) Calculate the present value of an annual paymen

Question

Problem 5-7 Present Values (LO3)

Calculate the present value of an annual payment of $1,000 you would received for 10 years if the interest rate is 5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Calculate the present value of an annual payment of $800 you would received for 15 years if the interest rate is 5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Calculate the present value of an annual payment of $1,000 you would received for 10 years if the interest rate is 20%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Calculate the present value of an annual payment of $800 you would received for 15 years if the interest rate is 20%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Calculate the present value of an annual payment of $1,000 you would received for 10 years if the interest rate is 5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Explanation / Answer

a1. $7721.73

a2.$8303.73

a3. $800 for 15 Years as the PV is higher

b1.$4192.47

b2.$3740.38

b3. $1000 a year for 10 years, PV is more than the other one.

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