tory Bookmarks Window Help mood le-2017-2018.calstatela.edu les Inte Manilia Nin

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tory Bookmarks Window Help mood le-2017-2018.calstatela.edu les Inte Manilia Ninoy Aquino at.. Home Cal State LA L STATE LA Moodle 2017-2018 Use the table below to answer the following questions Present Value of an Annuity of 1 Present Value of 1 Period 4% 8% 4% 8% 0.9615 0.9259 0.9615 0.9259 0.9246 0.8573 1.8861 1.7833 0.8890 0.7938 2.7751 2.5771 0.8548 0.7350 3.6299 3.3121 0.8219 0.6806 4.4518 3.9927 0.7903 0.6302 5.2421 4.6229 2 3 6 Assumption: Required annual percentage rate (APR) of return is 8%. If an investment pays you $8000 every 6 months for 3 years, what is its present value? Select one: A. $43,614 B$41,937 C. $39,451 D. $37,934

Explanation / Answer

Amount invested every six months = $ 8,000 Total Years =3 = Total Period = 3 Years * 2 = 6 Years Rate of interest = 8% so For half year = 8% / 2 = 4 % Periods Initial Amount PVF @ 8% Present Value 1 $                   8,000                           0.962 $                       7,692 2 $                   8,000                           0.925 $                       7,396 3 $                   8,000                           0.889 $                       7,112 4 $                   8,000                           0.855 $                       6,838 5 $                   8,000                           0.822 $                       6,575 6 $                   8,000                           0.790 $                       6,323 Total $                     41,937 Alternative Cumulative value of the PVF @ 4% for 6 period(Yeas) =5.2421 Present value = $ 8000* 5.2421 = $                     41,937

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