Show how to get answer 6. What is the present value of the following annuity? $2
ID: 2643824 • Letter: S
Question
Show how to get answer
6.
What is the present value of the following annuity?
$2,525 every half year at the beginning of the period for the next 3 years, discounted back to the present at 6.68 percent per year, compounded semiannually.
Round the answer to two decimal places.
7.
Big Brothers, Inc. borrows $199,127 from the bank at 18.86 percent per year, compounded annually, to purchase new machinery. This loan is to be repaid in equal annual installments at the end of each year over the next 5 years. How much will each annual payment be?
Round the answer to two decimal places.
Explanation / Answer
Present value of annuity: PV = 2525 * [{1-(1.034)^(-6)} / 0.0334] = $ 13525.60
Each annual payment: 199127 * 0.1886 * ((1.1886)^5) / ((1.1886)^5) -1) = $ 64921.09