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CH 02 Annuity - Completed and Answers

This document contains information about calculating the present and future values of annuities using timelines, formulas, and financial functions. It provides examples of calculating the present value, future value, payment amount, discount rate, and number of periods for annuities. The document also shows a system of equations for solving for the four main annuity variables.

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NiketGhelani
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74 views22 pages

CH 02 Annuity - Completed and Answers

This document contains information about calculating the present and future values of annuities using timelines, formulas, and financial functions. It provides examples of calculating the present value, future value, payment amount, discount rate, and number of periods for annuities. The document also shows a system of equations for solving for the four main annuity variables.

Uploaded by

NiketGhelani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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ANNUITY Present Value

Inputs
Annuity
Payment $39,894.00 398
$140.00
$120.00
Discount Rate / Period 4.3% 7
$100.00
Number of Periods 6 6 $80.00
Cash Flows
$60.00
$40.00 Present Va
Each Cash
$20.00
$0.00
0 1 2 3 4 5
Period

Annuity Present Value using a Time Line


Period 0 1 2 3 4 5
Cash Flows $39,894.00 $39,894.00 $39,894.00 $39,894.00 $39,894.00
Present Value of Each Cash Flow $38,249.28 $36,672.37 $35,160.47 $33,710.90 $32,321.09
Present Value $176,114.11

Annuity Present Value using the Formula


Present Value $207,102.70

Annuity Present Value using the PV Function


Present Value $207,102.70
y

Cash Flows

Present Value of
Each Cash Flow

4 5
ANNUITY Future Value
Inputs Annuity
$140.00
Payment $100.00 10
$120.00
Discount Rate / Period 9.0% 9 $100.00
$80.00
Ca
Number of Periods 3 3 $60.00
$40.00 Fu
Ca
$20.00
$0.00
0 1 2 3 4 5
Period

Annuity Future Value using a Time Line


Period 0 1 2 3 4
Cash Flows $100.00 $100.00 $100.00 $100.00
Future Value of Each Cash Flow $141.16 $129.50 $118.81 $109.00
Future Value

Annuity Future Value using the Formula


Future Value $327.81

Annuity Future Value using the FV Function


Future Value $327.81
Annuity

Cash Flows

Future Value of Each


Cash Flow

2 3 4 5
Period

5
$100.00
$100.00
$598.47
ANNUITY System of Four Annuity Variables
Inputs
Annuity
Payment $150.00 15
$140.00
$120.00
Discount Rate / Period 10.0% 10
$100.00
Number of Periods 3 3 $80.00
Cash Flows
$60.00
Present Value $386.99 7 $40.00 Present Value of
Each Cash Flow
$20.00
$0.00
0 1 2 3 4 5
Period

Annuity Present Value using a Time Line


Period 0 1 2 3 4 5
Cash Flows $150.00 $150.00 $150.00 $150.00 $150.00
Present Value of Each Cash Flow $136.36 $123.97 $112.70 $102.45 $93.14
Present Value $568.62

Annuity Present Value using the Formula


Present Value $373.03

Annuity Present Value using the PV Function


Present Value $373.03

Payment
Payment using the Formula $155.61
Payment using the PMT Function $155.61
Discount Rate / Period
Discount Rate / Per using the RATE Func 7.9%

Number of Periods
Num of Periods using the NPER Function 3
ANNUITY Present Value
Inputs
Annuity
Payment $150.00 15
$140.00
$120.00
Discount Rate / Period 10.0% 10
$100.00
Number of Periods 3 3 $80.00
Cash Flows
$60.00
$40.00 Present Value of
Each Cash Flow
$20.00
$0.00
0 1 2 3 4 5
Period

Annuity Present Value using a Time Line


Period 0 1 2 3 4 5 6
Cash Flows $150.00 $150.00 $150.00 $150.00 $150.00 $150.00
Present Value of Each Cash Flow $136.36 $123.97 $112.70 $102.45 $93.14 $84.67
Present Value $653.29

Annuity Present Value using the Formula


Present Value $373.03

Annuity Present Value using the PV Function


Present Value $373.03
ANNUITY Future Value
Inputs Annuity
$140.00
Payment $63.92 6
$120.00
Discount Rate / Period 9.1% 9 $100.00
$80.00
Ca
Number of Periods 4 4 $60.00
$40.00 Fu
Ca
$20.00
$0.00
0 1 2 3 4 5
Period

Annuity Future Value using a Time Line


Period 0 1 2 3 4
Cash Flows $63.92 $63.92 $63.92 $63.92
Future Value of Each Cash Flow $83.01 $76.08 $69.74 $63.92
Future Value $292.75

Annuity Future Value using the Formula


Future Value $292.75

Annuity Future Value using the FV Function


Future Value $292.75
Annuity

Cash Flows

Future Value of Each


Cash Flow

2 3 4 5
Period

5
ANNUITY System of Four Annuity Variables
Inputs
Annuity
Payment $53.00 5
$140.00
$120.00
Discount Rate / Period 7.0% 7
$100.00
Number of Periods 4 4 $80.00
Cash Flows
$60.00
Present Value $179.52 3 $40.00 Present Value of
Each Cash Flow
$20.00
$0.00
0 1 2 3 4 5
Period

Annuity Present Value using a Time Line


Period 0 1 2 3 4 5
Cash Flows $53.00 $53.00 $53.00 $53.00
Present Value of Each Cash Flow $49.53 $46.29 $43.26 $40.43
Present Value $179.52

Annuity Present Value using the Formula


Present Value $179.52

Annuity Present Value using the PV Function


Present Value $179.52

Payment
Payment using the Formula $53.00
Payment using the PMT Function $53.00
Discount Rate / Period
Discount Rate / Per using the RATE Func 7.0%

Number of Periods
Num of Periods using the NPER Function 4
ANNUITY System of Four Annuity Variables
Inputs
Annuity
Payment $20.27 2
$25.00

Discount Rate / Period 7.0% 7 $20.00

$15.00
Number of Periods 10 10
Cash Flows
$10.00
Present Value $142.38 2 Present Value of
Each Cash Flow
$5.00

$0.00
0 1 2 3 4 5 6 7 8 9 10 11
Period

Annuity Present Value using a Time Line


Period 0 1 2 3 4 5 6 7 8
Cash Flows $20.27 $20.27 $20.27 $20.27 $20.27 $20.27 $20.27 $20.27
Present Value of Each Cash Flow $18.94 $17.70 $16.55 $15.46 $14.45 $13.51 $12.62 $11.80
Present Value $142.37

Annuity Present Value using the Formula


Present Value $142.37

Annuity Present Value using the PV Function


Present Value $142.37

Payment
Payment using the Formula $20.27
Payment using the PMT Function $20.27
Discount Rate / Period
Discount Rate / Per using the RATE Func 7.0%

Number of Periods
Num of Periods using the NPER Function 10
9 10
$20.27 $20.27
$11.03 $10.30
ANNUITY System of Four Annuity Variables
Inputs
Annuity
Payment $173.00 17
$200.00
$180.00
Discount Rate / Period 32.8% 32 $160.00
$140.00
$120.00
Number of Periods 13 13
$100.00 Cash Flows
$80.00
Present Value $513.94 10 $60.00 Present Value of
Each Cash Flow
$40.00
$20.00
$0.00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Period

Annuity Present Value using a Time Line


Period 0 1 2 3 4 5 6 7 8
Cash Flows $173.00 $173.00 $173.00 $173.00 $173.00 $173.00 $173.00 $173.00
Present Value of Each Cash Flow $130.25 $98.06 $73.83 $55.59 $41.85 $31.51 $23.72 $17.86
Present Value $513.94

Annuity Present Value using the Formula


Present Value $513.94

Annuity Present Value using the PV Function


Present Value $513.94

Payment
Payment using the Formula $173.00
Payment using the PMT Function $173.00
Discount Rate / Period
Discount Rate / Per using the RATE Func 32.8%

Number of Periods
Num of Periods using the NPER Function 13
9 10 11 12 13
$173.00 $173.00 $173.00 $173.00 $173.00
$13.45 $10.12 $7.62 $5.74 $4.32
ANNUITY System of Four Annuity Variables
Inputs
Annuity
Payment $40.00 4
$45.00
$40.00
Discount Rate / Period 6.0% 6 $35.00
$30.00
Number of Periods 5 5 $25.00
Cash Flows
$20.00
Present Value $168.49 3 $15.00 Present Value of
$10.00 Each Cash Flow
$5.00
$0.00
0 1 2 3 4 5 6
Period

Annuity Present Value using a Time Line


Period 0 1 2 3 4 5
Cash Flows $40.00 $40.00 $40.00 $40.00 $40.00
Present Value of Each Cash Flow $37.74 $35.60 $33.58 $31.68 $29.89
Present Value $168.49

Annuity Present Value using the Formula


Present Value $168.49

Annuity Present Value using the PV Function


Present Value $168.49

Payment
Payment using the Formula $40.00
Payment using the PMT Function $40.00
Discount Rate / Period
Discount Rate / Per using the RATE Func 6.0%

Number of Periods
Num of Periods using the NPER Function 5

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