5-3 Future Value of an Annuity What is the future value of a $900 annuity payment over five years if interest rates are 8 percent? (LG5-2) 900 x [ (1+.08)^5 -1/.08] 900 x [1.5868/.08] 469.44 = 4224.96 5-5 Present Value Compute the present value of a $2,000 deposit in year 1 and another $1,500 deposit at the end of year 3 if interest rates are 10 percent. (LG5-3) 5-7 Present Value of an Annuity What's the present
value of a $900 annuity payment over five years if interest rates are 8 percent? (LG5-4) 5-11 Present Value of an Annuity Due If the present value of an ordinary, 7-year annuity is $6,500 and interest rates are 7.5 percent, what's the present value of the same annuity due? (LG5- 5-15 Effective Annual Rate A loan is offered with monthly payments and a 10 percent APR. What's the loan's effective annual rate (EAR)? (LG5-7 5-21 Present Value Given a 6 percent interest rate, compute the present value
of payments made in years 1, 2, 3, and 4 of $1,000, $1,200, $1,200, and $1,500. (LG5-3 5-39 Loan Payments You wish to buy a $25,000 car. The dealer offers you a 4-year loan with a 9 percent APR. What are the monthly payments? How would the payment differ if you paid interest only? What would the consequences of such a decision be? (LG5-9)
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What’s the present value of a $900 annuity payment over five years if interest rates are 8 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
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You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
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