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ngonta 2258063/viewContent/99662422/Niew ? ? cr (?.uenui. E MCR3UNN?-Functions-Whiteside -t Homework Help OSAPAC Content Assignment Unit 1: Discrete Functions Activity 11: Present Value of an Annuity Assignment Complete the following questions and submit them to the Lesson 4 Assignment Dropbox 1 Calculsts the pesent valus for the annutes lsted below Aj You require $1000 every year for 8 years at 3% a compounded annusly Bj Yos want to be pad $200 every month for 30 months The intarest rate is s compounded 2 You jst sold a tiouse for S200.000 Yu can rvest the morey st 5%a compounded sennaly How much cond you witdar every 6 months, staing n 6 months for the noxl 20 years?

Solution

1a). PVA = P[(1 - (1 + r)-n)/r]

= $1000[(1 - 1.03^-8) / 0.03]

= $1000[0.21/0.03] = $1000 x 7.02 = $7,019.69

1b). PVA = P[(1 - (1 + r)^-n)/r]

= $200[(1 - (1 + 0.06/12)^-30 ) / (0.06/12)]

= $200[(1 - 1.005^-30) / 0.005]

= $200[0.1390/0.005] = $200 x 27.79 = $5,558.81

2). P = [(PV x r)/(1 - (1 + r)^-n)]

= [($200,000 x 0.05/2) / (1 - (1 + 0.05/2)^-20x2)]

= [($200,000 x 0.025) / (1 - 1.025^-40)]

= $5,000/0.6276 = $7,967.25