This preview shows pages 1–3. Sign up to view the full content.

Answers for 24NV104708 1 . PV = FV x PVIF (k,n) where: PV - present value FV - future value PVIF - present value interest factor of \$1 k - discount rate or required rate of return n - number of period or years PV = \$5,000 x PVIF (5%,4) PV = \$5,000 x 0.8227 PV = \$ 4,114 2 . FV = A x FVIFA (k,n) where: FV - future value A - annual deposit (assuming beginning of the year) FVIFA - future value interest factor of annuity \$1 k - discount rate or required rate of return n - number of period or years FV = \$6,000 x FVIFA (4%,5) FV = \$6,000 x 5.6330 FV = \$ 33,798 3 . PV = A x PVIFA (k,n) where: PV - present value A - annual payment (assuming beginning of the year) PVIFA - present value interest factor of annuity \$1 k - discount rate or required rate of return n - number of period or years \$250,000 = \$18,000 x PVIFA (k,30) PVIFA (k,30) = \$250,000 / \$18,000 PVIFA (k,30) = 13.8889 At 30 periods, 13.8889 is between 5% and 6%. Using interpolation, approximate interest is 5.91636%.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
End of Annual Annual payment applied to Balance of Year Payment Interest Principal Principal 0 \$ 250,000.00
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}