Question

Please provide me an explnaition in detail?

*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. Your answer is correct. Click here to view factor tables $30,000 receivable at the end of each period for 8 periods compounded at 12%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value 5149,029 Your answer is correct. Click here to view factor tables $30,000 payments to be made at the end of each period for 16 periods at 9%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value $249,377) Your answer is correct. Click here to view factor tables $30,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value 46,165

Answer 1

(1)

present value of annuity = annuity x PVAF

= $30000 x 4.96764

= $149029

where,

PVAF(12%, 8) = 4.96764

(2)

present value of annuity = annuity x PVAF

= $30000 x 8.31256

= $249377

where,

PVAF(9%, 16) = 8.31256

(3)

present value = ($30000 x PVF(12%,7) + ($30000 x PVF(12%,8) + ($30000 x PVF(12%,9) + ($30000 x PVF(12%,10)

= ($30000 x 0.45235) +  ($30000 x 0.40388) +  ($30000 x 0.36061) +  ($30000 x 0.32197)

= $46165

where,

PVF(12%,7) = 0.45235

PVF(12%,8) = 0.40388

PVF(12%,9) = 0.36061

PVF(12%,10) = 0.32197