PROBLEM 3 Find the following values assuming a regular, or ordinary, annuity: -

Question

PROBLEM 3 Find the following values assuming a regular, or ordinary, annuity: - The present value of $400 per year for ten years at 10 percent - The future value of $400 per year for ten years at 10 percent - The present value of $200 per year for five years at 5 percent - The future value of $200 per year for five years at 5 percent assuming: a. A regular or ordinary annuity b. An annuity due ANSWER PROBLEM 3 Find the following values assuming a regular, or ordinary, annuity: - The present value of $400 per year for ten years at 10 percent - The future value of $400 per year for ten years at 10 percent - The present value of $200 per year for five years at 5 percent - The future value of $200 per year for five years at 5 percent assuming: a. A regular or ordinary annuity b. An annuity due ANSWER

Explanation / Answer

Find the following values assuming a regular, or ordinary, annuity:
a. The present value of $400 per year for ten years at 10 percent.

400*6.1446= 2458
b. The future value of $400 per year for ten years at 10 percent.

400*15.9374 = 6375
c. The present value of $200 per year for five years at 5 percent.

200*4.3295 = 866
d. The future value of $200 per year for five years at 5 percent.

200*5.5256 = 1105

Consider the following uneven cash flow stream:

Year Cash Flow
0 $ 0
1 250
2 400
3 500
4 600
5 600

a. What is the present (Year 0) value if the opportunity cost (discount) rate is 10 percent?

Cash flow

PVIF

PV

250

0.909091

227.2727

400

0.826446

330.5785

500

0.751315

375.6574

600

0.683013

409.8081

600

0.620921

372.5528

npv

1716

period A B C D particulars Rate 10% 10% 5% 5% period 10 10 5 5 Amount 400 400 200 200 PV 2457.83 6374.97 865.9 1105.13

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