Reference no: EM131933562
Present value of an annuity Find the present values of these ordinary annuities. Discounting occurs once a year. Round your answers to the nearest cent.
$800 per year for 16 years at 10%. _$
$400 per year for 8 years at 5%. _$
$900 per year for 8 years at 0%. _$
Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.
$800 per year for 16 years at 10%. _$
$400 per year for 8 years at 5%. _$
$900 per year for 8 years at 0%. _$
Problem
Finding the required interest rate
Your parents will retire in 28 years. They currently have $300,000 saved, and they think they will need $1,400,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
Problem
Present value for various discounting periods
Find the present value of $200 due in the future under each of these conditions:
10% nominal rate, semiannual compounding, discounted back 10 years. Round your answer to the nearest cent.
$
10% nominal rate, quarterly compounding, discounted back 10 years. Round your answer to the nearest cent.
$
10% nominal rate, monthly compounding, discounted back 1 year. Round your answer to the nearest cent.
$
Why do the differences in the PVs occur?
The present values decline as periods per year increase
The present values decline as periods per year decrease
The present values increase as periods per year increase
The present values are not affected by changes in the number of periods per year
The present values are positively related to the number of discounting periods per year