Question

Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2018, of a five-period annual annuity of $6,200 under each of the following situations: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

1.The first payment is received on December 31, 2019, and interest is compounded annually.
2.The first payment is received on December 31, 2018, and interest is compounded annually.
3.The first payment is received on December 31, 2019, and interest is compounded quarterly.
  

Required 1:

The first payment is received on December 31, 2019, and interest is compounded annually. (Round your final answers to nearest whole dollar amount.)

	Table or calculator function: Payment: n = i = PV - 12/31/2018:

i =

PV - 12/31/2018:

Required 2:

The first payment is received on December 31, 2018, and interest is compounded annually. (Round your final answers to nearest whole dollar amount.)

	Table or calculator function: Payment: n = i = PV - 12/31/2018:

Required 3:

The first payment is received on December 31, 2019, and interest is compounded quarterly. (Round your final answers to nearest whole dollar amount.)

	Deposit Date i = n = Deposit PV - 12/31/2018 12/31/2019 $6,200 12/31/2020 6,200 12/31/2021 6,200 12/31/2022 6,200 12/31/2023 6,200 $0

Answer 1

Answer 1.

Annual payment = $6,200
Annual interest rate = 12%
Period = 5 years

Present Value = $6,200 * 3.6048
Present Value = $22,350

Answer 2.

Annual payment = $6,200
Annual interest rate = 12%
Period = 5 years

Present Value = $6,200 * 4.0373
Present Value = $25,031

Answer 3.

Annual payment = $6,200
Annual interest rate = 12%
Quarterly interest rate = 3%

Present Value, 12/31/2019 = $6,200 * 0.8885
Present Value, 12/31/2019 = $5,509

Present Value, 12/31/2020 = $6,200 * 0.7894
Present Value, 12/31/2020 = $4,894

Present Value, 12/31/2021 = $6,200 * 0.7014
Present Value, 12/31/2021 = $4,349

Present Value, 12/31/2022 = $6,200 * 0.6232
Present Value, 12/31/2022 = $3,864

Present Value, 12/31/2023 = $6,200 * 0.5537
Present Value, 12/31/2023 = $3,433