Time Value of Money Questions
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6) A 10-year annual annuity due with the first payment occurring at date t=7 has a current value of $50 000. If the discount rate is 13% per year, what is the annuity payment amount?
7) You currently owe a finance company $6700 that you would like to pay back over the next 24 months (payments will be made at the end of the month.) The finance company is charging you 16% interest compounded quarterly. How much will your monthly payments be?
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6) A 10-year annual annuity due with the first payment occurring at date t=7 has a current value of $50 000. If the discount rate is 13% per year, what is the annuity payment amount?
Year
0 1 2 3 4 5 6 7 8 9 10
50,000 X X X X
Equation for present annual annuity due,
PVA = W x 1 - 1 ...
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