Exercise 65 Using the appropriate interest table compute the

Exercise 6-5

Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods.

Exercise 6-5

Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods.

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1.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=$52650[1-(1.11)^-7]/0.11

=$52650*4.71220

=$248097(Approx).

2.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=$52650[1-(1.09)^-17]/0.09

=$52650*8.54363

=$449822(Approx)

Present value =Cash flows*Present value of discounting factor(rate%,time period)

=52650/1.11^7+52650/1.11^8+52650/1.11^9+52650/1.11^10

=52650[1/1.11^7+1/1.11^8+1/1.11^9+1/1.11^10]

=52650*1.65869

=$87330(Approx).