**Unformatted text preview: **Problem 5-4 Calculating Annuity Present Values [LO 1]
An investment offers $8,700 per year for 17 years, with the first payment occurring 1 year from now.
Assume the required return is 11 percent.
Requirement 1:
What is the value of the investment today? (Enter rounded answer as directed, but do not use rounded
numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Present value
$ 65,674.51 0
Requirement 2:
What would the value be if the payments occurred for 42 years? (Enter rounded answer as directed, but
do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places
(e.g., 32.16).)
Present value
$ 78,103.35
Requirement 3:
What would the value be if the payments occurred for 77 years? (Enter rounded answer as directed, but
do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places
(e.g., 32.16).)
Present value
$ 79,065.31
Requirement 4:
What would the value be if the payments occurred forever? (Enter rounded answer as directed, but do
not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places
(e.g., 32.16).)
Present value
$ 79,090.91...

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- Fall '15
- Ikromov
- Time Value Of Money, Net Present Value, Calculating Annuity Present Values