Question

For each of the following annuities, calculate the annual cash flow. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Cash Flow Present Value Years Interest Rate
$ $ 31,900 6 12 %
28,900 8 10
152,000 15 15
221,700 15 14

Answer 1

Present Value = Cash Flow per year * Present Value of Annuity Factor ( Rate, Time)

= Cash Flow per year * [1- (1+interest rate) ^-time period]/rate

= Cash Flow per year * [ 1- ( 1+12%) ^ -6] / 12%

$ 31,900 = Cash Flow per year * 4.111407324

or Cash Flow per year = $ 31,900 / 4.111407324

or Cash Flow per year = 7,758.900418

= $ 7,758.90

Hence, the correct answer is $ 7,758.90

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Present Value = Cash Flow per year * Present Value of Annuity Factor ( Rate, Time)

= Cash Flow per year * [1- (1+interest rate) ^-time period]/rate

= Cash Flow per year * [ 1- ( 1+10%) ^ -8] / 10%

$ 28,900 = Cash Flow per year * 5.334926198

or Cash Flow per year = $ 28,900 /5.334926198

or Cash Flow per year = 5,417.132108

= $ 5,417.13

Hence, the correct answer is $ 5,417.13

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Present Value = Cash Flow per year * Present Value of Annuity Factor ( Rate, Time)

= Cash Flow per year * [1- (1+interest rate) ^-time period]/rate

= Cash Flow per year * [ 1- ( 1+15%) ^ -15] / 15%

$ 152,000 = Cash Flow per year * 5.847370099

or Cash Flow per year = $ 152,000 /5.847370099

or Cash Flow per year = 2,599.4592

= $ 2,599.46

Hence, the correct answer is $ 2,599.46

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Present Value = Cash Flow per year * Present Value of Annuity Factor ( Rate, Time)

= Cash Flow per year * [1- (1+interest rate) ^-time period]/rate

= Cash Flow per year * [ 1- ( 1+14%) ^ -15] / 14%

$ 221,700 = Cash Flow per year *6.142167985

or Cash Flow per year = $ 221,700 /6.142167985

or Cash Flow per year = 36,094.74709

= $ 36,094.75

Hence, the correct answer is $ 36,094.75

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