Question

C&H Ski Club recently borrowed money and agreed to pay it back with a series of six annual payments of $11,000 each. C&H subsequently borrows more money and agrees to pay it back with a series of four annual payments of $7,000 each. The annual interest rate for both loans is 10%. Find the present value of these two separate annuities. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar. Round "Table Factor" to 4 decimal places.)

First Annuity Number of Periods Interest Rate Single Future Payment x Table Factor = Amount Borrowed First payment 1 10% $11,000 x 0.9091 = $10,000 Second payment 2 10% 11,000 x = Third payment 3 10% 11,000 x = 0 Fourth payment 4 10% 11,000 x = 0 Fifth payment 5 10% 11,000 x = 0 Sixth payment 6 10% 11,000 x = 0 $10,000 Second Annuity Number of Periods Interest Rate Single Future Payment x Table Factor = Amount Borrowed First payment 1 10% $7,000 x = Second payment 2 10% 7,000 x = Third payment 3 10% 7,000 x = 0 Fourth payment 4 10% 7,000 x = 0 $0

Answer 1

1.

First Annuity
	Number of Periods	Interest Rate	Single Future Payment	x	Table Factor	=	Amount Borrowed
First payment	1	10%	11000	x	0.9091	=	$       10,000
Second payment	2	10%	11000	x	0.8264	=	$         9,090
Third payment	3	10%	11000	x	0.7513	=	$         8,264
Fourth payment	4	10%	11000	x	0.6830	=	$         7,513
Fifth payment	5	10%	11000	x	0.6209	=	$         6,830
Sixth payment	6	10%	11000	x	0.5645	=	$         6,210
							$               47,907

2.

Second Annuity
	Number of Periods	Interest Rate	Single Future Payment	x	Table Factor	=	Amount Borrowed
First payment	1	10%	7000	x	0.9091	=	$         6,364
Second payment	2	10%	7,000	x	0.8264	=	$         5,785
Third payment	3	10%	7,000	x	0.7513	=	$         5,259
Fourth payment	4	10%	7,000	x	0.6830	=	$         4,781
							$               22,189