Question

For each of the following annuities, calculate the annual cash flow. (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g.,32.16).) Cash Flow Future Value Interest Rate Years $ $ 24,850 5 % 8 $ 1,030,000 7 43 $ 856,000 8 29 $ 139,000 4 14

Answer 1

Answer:

(A)  $   2,602.34

(B)  $    4,156.97  

(C)  $   8,233.47

(D)  $ 46,796.64

Explanation:

We need to solve for the PMT of an ordinary annuity:

$FV \div \frac{(1+r)^{time} -1}{rate} = C$

(A)

FV 24,850

time   8

rate           0.05

$24850 \div \frac{(1+0.05)^{8}-1 }{0.05} = C$

C  $ 2,602.337

(B)

FV 1,030,000

time:    43

rate        0.07

$1030000 \div \frac{(1+0.07)^{43} -1}{0.07} = C$

C  $ 4,156.972

(C)

FV 856,000

time   29

rate             0.08

$856000 \div \frac{(1+0.08)^{29} -1}{0.08} = C$

C  $ 8,233.466

(D)

FV 856,000

time    14

rate        0.04

$856000 \div \frac{(1+0.04)^{14} -1}{0.04} = C$

C  $ 46,796.641