Question

Chapter 5 Homework ( Saved Help Save & Exit Submit Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2021, of a five-period annual annuity of $5,300 under each of the following situations: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. The first payment is received on December 31, 2022, and interest is compounded annually. 2. The first payment is received on December 31, 2021, and interest is compounded annually. 3. The first payment is received on December 31, 2022, and interest is compounded quarterly. points Complete this question by entering your answers in the tabs below. eBook Required 1 Required 2 Required 3 The first payment is received on December 31, 2022, and interest is compounded quarterly. (Round your final answers to nearest whole dollar amount.) Ask n= PV - 12/31/2018 $ Print Deposit Date 12/31/2022 12/31/2023 12/31/2024 | 12/31/2025 12/31/2026 i= 3% 3% 3% 3% 3% Deposit 5,300 5,300 5,300 5,300 5,300 References < Required 2 Required 3 )

Answer 1

Solution 1:

PV Factor based on
Table or Calculator function	PVA of $1
Payment:	$5,300
n=	5
i=	12.00%
PV factor	3.60478
Present value of lease	$19,105

Solution 2:

PV Factor based on
Table or Calculator function	PVAD of $1
Payment:	$5,300
n=	5
i=	12.00%
PV factor	4.03735
Present value of lease	$21,398

Solution 3:

quarterly rate of interest = 3%

Effective annual interest rate = 1*(1+0.03)^4 - 1 = 12.55%

Deposit Date	i=	n=	Deposit	PV Factor	Present Value
31-Dec-22	12.55%	1	$5,300.00	0.88849	$4,709
31-Dec-23	12.55%	2	$5,300.00	0.78942	$4,184
31-Dec-24	12.55%	3	$5,300.00	0.70140	$3,717
31-Dec-25	12.55%	4	$5,300.00	0.62319	$3,303
31-Dec-26	12.55%	5	$5,300.00	0.55370	$2,935
Total					$18,848