Find the present values of these ordinary annuities Discount

Find the present values of these ordinary annuities. Discounting occurs once a year. Round your answers to the nearest cent.

$500 per year for 10 years at 6%.

$  

$250 per year for 5 years at 3%.

$  

$300 per year for 4 years at 0%.

$  

Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.

$500 per year for 10 years at 6%.

$  

$250 per year for 5 years at 3%.

$  

$300 per year for 4 years at 0%.

Solution

a. N = 10, FV = 0, PMT = 500, rate = 6%

use PV function in Excel

present value = 3680.04

b. N = 5, FV = 0, PMT = 250, rate = 3%

present value = 1144.93

c. Present value = 300 * 4 = 1200

2.

a. present value = 3680.04 * 1.06 = 3900.85

b. present value = 1144.93 * 1.03 = 1179.27

c. present value = 300*4 = 1200