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For each of the following? cases, calculate the present value of the? annuity, assuming the annuity cash flows occur at the end of each year
For each of the following? cases, calculate the present value of the? annuity, assuming the annuity cash flows occur at the end of each year.
Annuity Interest? (%)Period? (Yrs) Present Value?
20,000 5 9
2,000 10 13
Expert Solution
1.Computation of Present Value of Annuity using PV Function in Excel:
=-pv(rate,nper,pmt,fv)
Here,
PV = Present Value of Annuity = ?
Rate = 5%
Nper = 9 Years
PMT = $20,000
FV = 0
Substituting the values in formula:
=-pv(5%,9,20000,0)
PV or Present Value of Annuity = $142,156.43
2.Computation of Present Value of Annuity using PV Function in Excel:
=-pv(rate,nper,pmt,fv)
Here,
PV = Present Value of Annuity = ?
Rate = 10%
Nper = 13 Years
PMT = $20,000
FV = 0
Substituting the values in formula:
=-pv(10%,13,20000,0)
PV or Present Value of Annuity = $142,067.12
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