 # present value of the annuity

An investor will receive an annuity of \$5,000 a year for seven years. The first payment is to be received 5 years from today. If the annual interest rate is 11.5 percent, what is the present value of the annuity? A) \$13,453. B) \$23,185. C) \$15,000. D) \$30,348.

Determine the PV of an annuity of \$5000 for 11 years and subtract from it the PV of an annuity of \$5000 for 4 years discounted at 11.5 %

An investor wants to receive \$1,000 at the beginning of each of the next ten years with the first payment starting today. If the investor can earn 10 percent interest, what must the investor put into the account today in order to receive this \$1,000 cash flow stream? A) \$6,759. B) \$7,145. C) \$5,759. D) \$6,145.

Its A - Remember to set your calculator to Begin Mode Or do the calc for regular annuity and multiply by (1+i)

hari Wrote: ------------------------------------------------------- > An investor will receive an annuity of \$5,000 a > year for seven years. The first payment is to be > received 5 years from today. If the annual > interest rate is 11.5 percent, what is the present > value of the annuity? > > A) \$13,453. > B) \$23,185. > C) \$15,000. > D) \$30,348. C - Dinesh S

A

hari Wrote: ------------------------------------------------------- > An investor wants to receive \$1,000 at the > beginning of each of the next ten years with the > first payment starting today. If the investor can > earn 10 percent interest, what must the investor > put into the account today in order to receive > this \$1,000 cash flow stream? > > A) \$6,759. > B) \$7,145. > C) \$5,759. > D) \$6,145. A - Dinesh S

If \$2,000 a year is invested at the end of each of the next 45 years in a retirement account yielding 8.5 percent, how much will an investor have at retirement 45 years from today? A) \$100,135. B) \$277,700. C) \$90,106. D) \$901,060. N = 45; PMT = –2,000; PV = 0; I/Y = 8.5%; CPT → FV Guys I’m getting answer as \$691,424 which is none of the above? Am, I doing something horrible or it is just time to sleep.

d

Calculator shows ‘D’ for me… you must not have reset the calculator to END mode… - Dinesh S

are you in end or bgn mode?

it can really just be interest rate compounding or annuity mode

Even in Begin mode the answer would be different, Did you clear out previous values from the calculator For TI - do 2nd Clear TVM before every problem to make sure u dont have any old values in there

Hi all, you guys seem very well versed on the settings on the BA II- I am having real problems with it… fundamentally on basic TVM roblems the values i input for N I/Y FV etc dont seem to register and certainly dont provide the correct answer…like yourselves I can calculate these things mainually but is proving time consuming. I one of you could walk through for the start what settings i need to even calculate the most basic problem that would be great .Thanks

you should make a thread and post some questions for one you have to make sure that you are in end mode make sure that p/y is 1 etc you can also look at some tutorials on the internet

It is C. Put it this way: Say “cost” is 15,000. U compound that amount with 11.5% (i) to get 25,850.3 (1.115 ^ 5 * 15000) at the BEGININNING of year 5. The PV of annuity due of next 7 year at the BEGINNING of year 5 is : Beginning mode, N=7, i=11.5%, FV=0, PMT= 5000, PV=? Thus, 15,000 seems most the closest to me. Any thoughts?

for the first question: how is this not A it doesnt say this is an annunity due n=7 i/y=11.5 pmt=5000 fv=0 pv = 23185 then to discount that back the five years (since payments start five years from now) fv = 23185 n = 5 i/y = 11.5 pmt = 0 pv = 13453

wouldn’t receive payments 5 years from now – mean at the end of 4 yrs? so if u used 4 – PV = 15000…