FUND OF FINANCIAL ACTNG (LL) W/CNCT COD
6th Edition
ISBN: 9781260692815
Author: PHILLIPS
Publisher: MCG
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Chapter C, Problem 9ME
To determine
To compute: the present value of $500,000 to be paid in 10 years with an interest rate of 8%.
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Future Value of an Annuity
Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press FV, and find the FV of the annuity due.) Do not round intermediate calculations. Round your answers to the nearest cent.
$400 per year for 10 years at 10%.
$
$200 per year for 5 years at 5%.
$
$400 per year for 5 years at 0%.
$
Now rework parts a, b, and c…
Present value of an annuity Consider the following case. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Amount of annuity
Interest rate
Period (years)
$26,000
9%
4
a. Calculate the present value of the annuity assuming that it is
(1) An ordinary annuity.
(2) An annuity due.
b. Compare your findings in parts
a(1)
and
a(2).
All else being identical, which type of
annuity—ordinary
or annuity
due—is
preferable? Explain why.
Future Value of an Annuity
Refer to each case in the table below to answer what is required in this problem.
Required:
Find the future value of the annuity, assuming that it is
(1) An ordinary annuity.
(2) An annuity due.
Compare your findings in parts a(1) and a(2). All else being identical, which type of
annuity—ordinary or annuity due—is preferable? Explain why.
Chapter C Solutions
FUND OF FINANCIAL ACTNG (LL) W/CNCT COD
Ch. C - Prob. 1QCh. C - Prob. 2QCh. C - Which of the following is most likely to be an...Ch. C - Prob. 4QCh. C - Prob. 5QCh. C - Prob. 6QCh. C - Prob. 7QCh. C - You are saving up for a Mercedes-Benz SLR McLaren,...Ch. C - Prob. 2MCCh. C - Prob. 3MC
Ch. C - Prob. 4MCCh. C - Prob. 5MCCh. C - Assume you bought a car using a loan that requires...Ch. C - Assume you bought a car using a loan that requires...Ch. C - Which of the following statements is true? a. When...Ch. C - Prob. 9MCCh. C - Prob. 10MCCh. C - Prob. 1MECh. C - Prob. 2MECh. C - Prob. 3MECh. C - Prob. 4MECh. C - Prob. 5MECh. C - Prob. 6MECh. C - Prob. 7MECh. C - Prob. 8MECh. C - Prob. 9MECh. C - Prob. 10MECh. C - Prob. 11MECh. C - Prob. 12MECh. C - Prob. 1ECh. C - Prob. 2ECh. C - Prob. 3ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Computing Bond Issue Proceeds and Issue Price Your...Ch. C - Computing Missing Present or Future Values...Ch. C - Prob. 1CPCh. C - Prob. 2CPCh. C - Prob. 3CPCh. C - Prob. 4CPCh. C - Prob. 1PACh. C - Recording Equipment Purchase with Two-Year Note...Ch. C - Prob. 3PACh. C - Prob. 4PACh. C - Prob. 1PBCh. C - Recording Equipment Purchase with Two-Year Note...Ch. C - Prob. 3PBCh. C - Prob. 4PB
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