eBook Value of an Annuity Using the appropriate tables solve

eBook Value of an Annuity Using the appropriate tables, solve each of the following: (Click here to access the time value of money tables to use with this problem.) Round your answers to two decimal places Required: 1, Beginning December 31, 2017, s equal withdrawals are to be made. Determine the equal annual withdrawals if $30,000 is invested at 10% interest compounded annually on December 31, 2016. 2. Ten payments of $3,000 are due at annual intervals beginning June 30, 2017, what amount will be accepted in canceilation of this series of p 2016, assuming a discount rate of 14% compounded annually? 3. Ten payments of $2,000 are due at annual intervals beginning December 31 . 2016. what amount will be accepted in canceilation of this seris of payments on January 1, 2016, assuming a discount rate of 12% compounded annually? Check My Work Previous Next All work saved Email Instructor Save and Exit Submit Assignment for Grading

Solution

Value of an annuity

1.     Value of annuity = amount invested / (PVIFA, 10%,5)

Value of equity = $30,000 / 3.7908 (from present value of ordinary annuity table )

Value of annuity = $7,913.90

2.     Amount required for cancellation is simply present value of ordinary annuity

PVA = Annuity amount x (PVIFA, 14%,10)

PVA = $3,000 x 5.2161

PVA = $15,648.30

3.     Amount required for cancellation is simply present value of ordinary annuity

PVA = Annuity amount x (PVIFA, 12%,10)

PVA = $2,000 x 5.6502

PVA = $10,432.20