Suppose you are going to receive $14,200 per year for four years. The appropriat
ID: 2814237 • Letter: S
Question
Suppose you are going to receive $14,200 per year for four years. The appropriate interest rate is 9.1 percent.
What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due? Suppose you plan to invest the payments for four years. What is the future value if the payments are an ordinary annuity? Suppose you plan to invest the payments for four years. What is the future value if the payments are an annuity due?
Explanation / Answer
Present value of an ordinary annuity $ 45,903.23 =PV(9.1%,4,-14200) Present value of an annuity due $ 50,080.42 =PV(9.1%,4,-14200,,1) future value of an ordinary annuity $ 65,034.26 =FV(9.1%,4,-14200) future value of an annuity due $ 70,952.38 =FV(9.1%,4,-14200,,1)