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A 7 year annuity of fourteen $5,800 semiannual payments will begin 9

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A 7-year annuity of fourteen $5,800 semiannual payments
will begin 9 years from now, with the first payment coming
9.5 years from now.
If the discount rate is 8 percent compounded monthly, what
is the value of this annuity five years from now? (Do not
round intermediate calculations and round your answer to
2 decimal places, e.g., 32.16.)
If the discount rate is 8 percent compounded monthly, what
is the value three years from now? (Do not round
intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
If the discount rate is 8 percent compounded monthly, what
is the current value of the annuity? (Do not round
intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
Solution
(1) Monthly interest = 8% / 12 = 0.67%
Value of annuity at beginning of year 9 = $5,800 x PVIFA
(0.67%, 14 periods)
= $5,800 x 13.3209 = $77,261.22
Value of this amount at beginning of year 5 [5 years from
now, discounted 4 years (8 periods) from year 9]
= $77,261.22 / (1.0067)8 = $77,261.22 / 1.0549 =
$73,242.14

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A 7-year annuity of fourteen $5,800 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 8 percent compounded monthly, what is the value of this annuity five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) If the discount rate is 8 percent compounded monthly, what is the value three years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) If the discount rate is 8 percent compounded monthly, what is the cu ...
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