Chapter 06 - In-Class Exercises

Chapter 06 - In-Class Exercises - Exercise #4 (Present...

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Chapter # 6 In-Class Exercises Page 1 of 5 Chapter 06 - In-Class Exercises.doc - 09/28/04) Exercise #1 (Future value of a single sum) Present Value Interest Rate Number of Periods Future Value 10,000 $ 6% 15 8,500 $ 12% 35 6,000 $ 2 6,615 $ 2,000 $ 11% 10,621.78 $ Exercise #2 (Present value of a single sum) Present Value Interest Rate Number of Periods Future Value 5% 8 8,500 $ 8% 5 10,500 $ 7,136.77 $ 3 8,500 $ 6,079.56 $ 12% 12,000 $ Exercise #3 (Future value of an annuity) Payment Amount Interest Rate Number of Periods Future Value 250 $ 6% 5 625 $ 12% 32 8% 12 3,074.30 $ 4% 24 13,209.92 $
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Unformatted text preview: Exercise #4 (Present value of an annuity) Payment Amount Interest Rate Number of Periods Present Value 250 $ 6% 5 625 $ 12% 32 8% 12 1,130.41 $ 4% 24 4,955.26 $ Bonus Problem: On January 1, 2004 you have won the lottery and will be paid $100,000 each year for 15 years starting on January 1, 2009 . (there are no payments in 2004-2008) What is the present value of this annuity on January 1, 2004? (assume a 7% interest rate) Creating a time-line will help Hint: First, draw the time line for the payments...
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Chapter 06 - In-Class Exercises - Exercise #4 (Present...

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