Show how to get answer 4. What is the present value of the following annuity? $4
ID: 2643823 • Letter: S
Question
Show how to get answer
4.
What is the present value of the following annuity?
$4,089 every half year at the end of the period for the next 14 years, discounted back to the present at 16.67 percent per year, compounded semiannually.
Round the answer to two decimal places.
5.
You have decided to place $578 in equal deposits every month at the beginning of the month into a savings account earning 6.59 percent per year, compounded monthly for the next 11 years. The first deposit is made today. How much money will be in the account at the end of that time period?
Round the answer to two decimal places.
Explanation / Answer
SOLUTION:
4. Calculation of NPV:
$4,089 for every half year.
So, for 1 year its $4,089 * 2 = $8,178 / year
NPV = $8,178 / 74.96
5.
For 1 year = $578 * 12months
Investing $6,936 every year.
FV = $7059.55 / 0.0702