QUESTION 11 THIS IS A MANDATORY SUBMISSION An ordinary annuity has payments of $1000 made semi-annually with a nominal compound interest rate of 5%/year. n (as is the case for simple annuities). Assume the total length of the annuity is 4 years. Determine a) A cash flow diagram for the annuity from the initial start of the loan until the end of the 4 years b) The present value of the 2nd payment only c) The future value of the 3rd payment at the end of year 4 d) The present value of the entire annuity
QUESTION 11 THIS IS A MANDATORY SUBMISSION An ordinary annuity has payments of $1000 made semi-annually with a nominal compound interest rate of 5%/year. n (as is the case for simple annuities). Assume the total length of the annuity is 4 years. Determine a) A cash flow diagram for the annuity from the initial start of the loan until the end of the 4 years b) The present value of the 2nd payment only c) The future value of the 3rd payment at the end of year 4 d) The present value of the entire annuity
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA3: Time Value Of Money
Section: Chapter Questions
Problem 12E
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Transcribed Image Text:QUESTION 11
THIS IS A MANDATORY SUBMISSION
An ordinary annuity has payments of $1000 made semi-annually with a nominal compound interest rate of 5%/year. Note the compounding rate is the same as the payment period
(as is the case for simple annuities). Assume the total length of the annuity is 4 years. Determine
a) A cash flow diagran for the annuity from the initial start of the loan until the end of the 4 years
b) The present value of the 2nd payment only
c) The future value of the 3rd payment at the end of year 4
d) The present value of the entire annuity
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QUESTION 12
THIS IS A MANDATORY SUBMISSION
Calculate the number of compounding periods for an ordinary annuity with a future value of $16681 and payments of $448, The nominal rate is 5%/year compounded semi-
annually. Note: this is a simple annuity, which means the payments occur semi-annually as well, Write your final answer as an integer.
QUESTION 13
The present value of an ordinary annuity can be calculated in two ways: i) The sum of the present values of each individual payment made for the entirety of the loan or i) Using
1- (1+i) ¯"
PV = PMT
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