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Accounting and Finance Assignment - Value Of Annuity

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Added on  2020-02-24

Accounting and Finance Assignment - Value Of Annuity

   Added on 2020-02-24

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Accounting and Finance Assignment - Value Of Annuity_1
Accounting and FinanceQuestion 1 (a)Payment per period C=$800Future value of annuity FVA=$10,000Interest rate per period r=10%p.a.=102%=5%halfyearlyNumber of full payments n=?Size of the concluding payment ¿?Here, FVA=C∗[(1+r)n−1]r10,000=800∗[(1+0.05)n−1]0.05n=ln1.625ln1.05=9.9509Hence, number of full payment is 9. Also, the size of concluding payment = 9.9509∗800=$7,960.7(b)Amount invested (initial) would be given as ¿200,000−20,000=$180,000Interest (per annum) ¿180,000∗10%=$18,000Interest (for 4 years) ¿18000∗4=$72,000Lump-sum amount (at the end of 4 years) ¿180,000+72,000=$252,000Present value of annuity PVA=P∗[1−(1+r)n]rWhere, P=?PVA=252000n=180months
Accounting and Finance Assignment - Value Of Annuity_2
Accounting and Financer=1012%=0.833%Now, FV=P∗[1−(1+r)−n]r252000=P∗[1−(1+0.0083)−180]0.0083P=252000/93.43P=$2697.17Therefore, the monthly payment would be $2697.17. (c)Payment per year C=$4000Interest rate r=5%p.a.Time period n=11 years Future value of annuity FVA=?Here, FVA=C∗[(1+r)n−1]r¿4000∗[(1+0.05)11−1]0.05¿$56,827.15Dr. Ritz would have $56,827.15 in December 2017. (d)Cash flow for 10 years = $20,000 Time period = 10 years Discount rate = 6%Present values of cash flows are given below:
Accounting and Finance Assignment - Value Of Annuity_3

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