(USLUR 17 .points) What is the present value of an annuity of $500 per year (first...

Question

Question

business finance

Answer 1

Answer #1

Dear student, only one question is allowed at a time. I am answering the first question

17)

Present value of annuity

= P x [ 1 – ( 1 + r ) ^ -n] / r

Where,

P = Periodic payment = $500

r = Rate of interest = 14% or 0.14

n = Number of years = 42

So, Present Value

= $500 x [ 1 – ( 1.14 ^ - 42)] / 0.14

= $500 x [ 1 - 0.004074] / 0.14

= $500 x 7.113757

= 3,556.88

Answer 2

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